But since then, they've moved dramatically higher, with the selloff accelerating following President-elect Donald Trump's unexpected victory over Democrat Hillary Clinton. Most foreign central banks' hold the bulk of their foreign currency reserves in dollar-denominated bonds like Treasurys.

An official at the news department of the People's Bank of China, the nation's central bank, declined to comment.

In October, China's holdings of US Treasuries fell by US$41.3 billion (S$59.5 billion) to US$1.115 trillion, according to data from the US Treasury Department. The Institute of International Finance, a Washington-based group of financial institutions world-wide, estimates that net outflows doubled to $207 billion in the third quarter from the previous three months.

"Just looking forward, it's a big risk for yields for next year, if it continues or more importantly if it accelerates", Kohli said.

China's reduction of its holdings of Treasuries in the autumn may well have helped it avoid some hefty losses.

Japan isn't the biggest single holder of USA debt.

The latest-month figures reflect a $4.5 billion reduction in Japan's Treasury holdings and a $41.3 billion drop in China, which in recent years has begun reversing a longstanding buildup of US assets as capital outflows and currency depreciation prompt the country to sell dollar assets. Its holdings have fallen by about US$17.3 billion from the previous October.

China's foreign currency holdings sank to the lowest level in five years last month. The yuan fell to its weakest level against the USA dollar in more than eight years on Thursday, after the Federal Reserve raised interest rates and indicated that it expects three more rate increases next year.

"China has been consciously cutting its holdings of U.S. Treasuries, to defend the yuan, and it's hard to stop this trend", said Zhou Hao, Singapore-based economist with Commerzbank. It has never made its holdings of U.S. government debt public, guarding the composition of its US$3 trillion in foreign exchange as a state secret. Japan trimmed its holdings by a smaller 0.4 percent, which meant its holdings of $1.13 trillion exceeded China's total.

China has been dipping into its reserves, selling Treasuries to support the yuan. Late on Thursday, 10-year yields were at 2.598 percent.

The forex regulator also noted that there is a solid basis for cross-border capital flow to remain stable, in view of China's low external debts, an opening inter-bank bond market, and a stable yuan exchange rate index. China has held the top spot for a number of years. Trump has suggested he will take a more confrontational stance toward China on trade, threatening to slap tariffs of as much as 45% on Chinese goods.

China has lost its crown as the United States' biggest overseas creditor.

There are few alternatives to USA government bonds, with their negligible risk of default and positive yields.

Because of its far-reaching implications for the Treasury market and the broader USA economy, the trend is making investors nervous.

However, Chinese government policy advisers, who declined to be identified because of the sensitivity of the subject, say they believe that's highly unlikely.