The only explanation why China continues to hold such a gigantic share of US debt, according to Li, is out of broader concern for US-China relations.

"But no one can guarantee that the government can resist the domestic pressure, especially from those economists who have called for diversified investment and smaller US Treasuries buying," he said.

Chinese media have gone even further, with Xinhua News Agency saying, "What may also be included as a key part of an effective reform is the introduction of a new international reserve currency that is to be created to replace the dominant US dollar."

However, not everyone agrees it is time to reduce holdings of US Treasuries.

Liu Yuhui, a researcher with the Institute of Finance and Banking at the Chinese Academy of Social Sciences, said he did not fully agree that multinational stocks are a good alternative to US Treasury bonds.

"If you look at multinational stocks over the past one or two years, their performance is not very good. Those that performed extraordinary well are actually companies that rely heavily on the local US market," he said.

He said the global capital market has heralded a rebalancing of the world's economy: Emerging markets, wooed by global investors in the past, have seen great volatility while developed markets are once again embraced by investors as they showed signs of recovery.

"This suggested to us that we should pursue different investment strategies in different markets. We can invest more in corporate debt in emerging economies while focusing on sovereign debt in developed economies," he said.

Li Wei, an economist at Standard Chartered Plc, said that it is difficult to cut China's stock of dollar assets.

"There is no financial instrument that is as highly liquid as US Treasuries, and Treasuries are superior in terms of safety," Li said.

Compared with cutting US debt holding, both Li and Liu preferred reform of China's foreign reserve investment agencies, making them more commercial.

"Reform could be done from within the institutions, or allow more commercial-based agencies to manage (the reserves)," Li said.