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China 'may cut US debt holdings'
US-Chinese trade relations are coming under increasing strain
China may reduce the amount of US bonds it holds as part of its foreign exchange reserves, an influential official has reportedly said.
The remarks, made by Parliamentary vice-chairman Cheng Siwei, triggered a fall in the US dollar against leading currencies in European trading.
China is a major funder of US debt, holding about £260bn (£149bn) in US Treasury bonds - second only to Japan.
Any reduction in China's dollar assets could hit the US economy.
Should China cut its US dollar holdings, this could drive up long-term yields on US bonds, which could in turn put pressure on interest rates.