China trims holdings of US Treasurys by 1.3 pct.

By MARTIN CRUTSINGER AP Economics Writer

WASHINGTON (AP) - China trimmed its holdings of U.S. Treasury debt 1.3 percent in February, the fourth consecutive decline. Those reductions are raising concerns that the U.S. government could face higher interest rates to finance its soaring budget deficits in the future.

The Treasury Department says China's holdings dropped $11.5 billion to $877.5 billion. That still leaves it as the largest foreign holder of U.S. Treasury debt. Japan retained the No. 2 spot with $768.5 billion, a drop of 0.4 percent from the January level.

Net foreign purchases of long-term securities, a category that includes both government and corporate debt, totaled $47.1 billion in February. It compares with $15 billion in January.