China reduced its holdings in U.S. Treasury securities by $14.2 billion in October, said the U.S. Treasury Department.

China retained its position as the largest foreign holder of U.S. Treasury securities, with $1.1341 trillion in its portfolio. Japan, the second largest foreign holder, increased its holdings by $22.2 billion to a record high of $979 billion.

Concerns have been growing about the safety of the dollar assets given the indebtedness of the federal government and weakness of its economy. For the first time in history, Standard & Poor's in August lowered the rating on the U.S. sovereign debt from AAA to AA+.

But analysts believe U.S. government debt could still be highly valued in terms of volume and liquidity, especially at a time when European counties are still struggling with a debt crisis.

"The U.S. Treasury securities would remain a good option for China as the country's foreign exchange reserve swells," said Song Hong, a researcher from the Institute of World Economics and Politics under the Chinese Academy of Social Sciences.

"Many sectors in real economies of Western countries have been closed to Chinese investors," he added.