China increased its holdings of the U.S. Treasury debt in July for the fourth month in a row, data showed Sunday, indicating the U.S. government bonds remain an attractive investment vehicle for the world's No. 2 economy.

According to a monthly report released online by the U.S. Department of Treasury, China's holdings of U.S. government debt rose to US$1.17 trillion in July, up $8 billion from the previous month.

Since April, China's U.S. dollar assets have been rising after declining for five straight months. China remained the biggest foreign holder of U.S. Treasuries, followed by Japan, which held $914.8 billion worth of the U.S. state debt last month.

However, total foreign holdings dropped to US$4.48 trillion from $4.49 trillion in June, the second monthly decline in more than two years.

Watchers said the decline reflects growing woes over a possible default of U.S. government bonds.

Credit appraiser Standard & Poor's downgrade last month of the U.S. credit rating has increased worries over the U.S. economy and hurt global markets.

Beijing has urged Washington to take measures to address market confidence in the dollar and U.S. government debt, as uncertainty has grown about its large holdings of U.S. Treasury bonds.

"We hope the U.S. will carry out appropriate economic policies and maintain fiscal and financial stability to protect the interests and confidence of investors," Chinese Premier Wen Jiabao said on Wednesday at the opening of the World Economic Forum's annual meeting in China's northeastern city of Dalian.