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BBC

China holds more US government debt than any other country and cut its holdings of US securities by more that 3% in June, said the BBC's Chris Hogg. Inflation fear In recent months the US government's budget deficit has widened thanks in part to the Obama administration's costly stimulus plan. Our correspondent in Shanghai says that China is worried about this, and fears the stimulus efforts will fuel inflation in the US, reducing the value of the dollar. This would then erode the value of the debt China holds in the US currency. In June, China cut its holdings of US securities by about $25bn, a fall of 3.1%. 'Dollar alternative' The sales were made as the US treasury secretary was visiting Beijing to try to reassure the Chinese that their investment in his country's government debt is safe. In 2008, the Chinese increased their holdings in US debt by 52% over 12 months. "China has said it would like to establish an alternative to the US dollar as

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