China's U.S. Treasury stock at 16-month low(2)

"Diversifying the portfolio and moderately reducing dollar assets is the only choice in the long term."

Investing in US Treasury bonds is "relatively safe" at the moment but is definitely not the best step to take, Zhou said. He said the chances are good that the securities will depreciate.

"Diversifying foreign reserves calls for varying the types of currencies and also diversifying assets," said Mei Xinyu, a senior researcher at the Ministry of Commerce's Chinese Academy of International Trade and Economic Cooperation.

Mei said the Chinese government should concentrate more on holding diverse classes of assets - by, for instance, investing in the US stock market or in stocks in other countries.