China bought a record amount of Japanese debt this year when it purchased a net 640.8 billion yen (US$7.65 billion) in short-term bills in July.

Its total net buying of Japanese debt has risen to about 2.3 trillion yen so far this year - a record since data started to be kept in 2005.

The market expects more Japanese debt to be bought as China diversifies its foreign reserves allocation.

The country already holds the world's biggest foreign reserves of US$2.45 trillion.

China's mounting foreign exchange reserves are held in a basket of assets which is dominated by US dollars at 65 percent. Euros take up 26 percent, pounds 5 percent and yen 3 percent, said China Securities Journal earlier this month, citing reserve managers it didn't name.

Besides sovereign debt, China also holds gold as an alternative in its reserves.

China is still the single biggest holder of the US Treasuries though latest data showed such holdings have been slightly cut.

It held US$843.7 billion of the debt at the end of June.