China resumed net purchases of U.S. Treasury securities in July after two consecutive months of net sales.

China's holdings rose by $3 billion to $846.7 billion in July, still ahead of Japan as the largest foreign holder of U.S. Treasury securities, said the U.S. Department of Treasury. Japan increased its holdings to $821 billion in July from $803.6 billion in June.

This news soothed worries Washington's largest creditor was looking to dump its dollar assets. China trimmed its holdings of U.S. Treasury securities by $51.1 billion in the first half of this year, amid concerns over the safety of its U.S. dollar assets.

China accelerated investments of foreign exchange reserves in part because of a run-up in the trade surplus, said Zhao Xijun, Deputy Director of the Financial and Securities Institute of Renmin University of China. The country's trade surplus hit an 18-month record high of $28.7 billion in July.

While clouds gather over the global economic landscape, the U.S. Treasury bonds are still considered a safe haven, said Bo Ruobai, an economics professor at the Central University of Finance and Economics.