China upped its holdings of U.S. treasuries in June by US$5.7 billion to US$1.1655 trillion.

China upped its holdings of US treasuries in June by US$5.7 billion to US$1.1655 trillion, the third increase in as many months, the US Treasury Department said Monday.

Beijing has continued to increase its holdings of U.S. federal debt despite a downgrade by Standard & Poor's last week, which cut the US credit rating from AAA to AA+ for the first time in history.

China holds about 8 percent of US government debt, about a third of that held by foreign investors. Some 70 percent is held by domestic investors, former Commerce Secretary Gary Locke said in May.

Ma Jun, chief economist of Deutsch Bank China, said China has little choice but to invest in U.S. treasuries, because of a sell-off of treasuries by China would send a negative shock through the Chinese and global economies.

He said China should diversify its dollar assets gradually and avoid any sudden selloff.

China's business press carried the story above on Tuesday.