China increased its holdings in the U.S. Treasury securities by $17.7 billion in March to $895.2 billion, according to a report released by the U.S. Department of the Treasury on May 17.

This was the first increase in six months, and China remains the largest foreign holder of the U.S. Government debt, followed by Japan and the UK. In the previous four consecutive months, China had been shedding its holdings amid concerns over the safety of its U.S. dollar assets.

But now the country has a strong need to invest given a large number of foreign exchange reserves added in the first quarter of 2010, said Guo Tianyong, Director of the Researcher Center of China's Banking Industry under the Central University of Finance and Economics.

While the euro buckles under the heavy weight of the sovereign debt crisis, buying into dollar assets has become a relatively safe bet, he said.

Meanwhile, the U.S. economic recovery is also adding luster to the attractiveness of the debt, said Liu Yuhui, a senior researcher at the Chinese Academy of Social Sciences.