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China's holdings of US Treasury bonds declined for the third consecutive month in May, which economists said reflected normal market operations. The economists said it was unlikely that China would use the holdings to retaliate against the US amid the ongoing trade war. 

China reduced its holdings of US Treasury bonds by $2.8 billion to $1.11 trillion in May, its lowest level in nearly two years, according to data released by the US Treasury Department on Wednesday. 

Despite the fall, China remained the largest holder of US Treasury bonds.

"The move is just a normal market move and the sale is a small sum. Other factors such as turnover due to expiration of holdings will also lead to a drop," Cao Yuanzheng, chief economist at Bank of China International, told the Global Times on Wednesday.

China's holdings fell $10.4 billion to $1.12 trillion in March and dropped by $7.5 billion to $1.113 trillion in April.

If a country as important as China sells all of its US Treasury holdings, American monetary policy would become ineffective, which would be a "financial atomic bomb" bringing harm to not only to the US but also the world's economy, Cao said.

China will not choose to sell out US debt as a means of retaliation against the US, Cao noted.

Liu Xuezhi, an economist at the research center under the Bank of Communications, agreed, saying that such market operations should not be "politicalized."

The adjustment was also influenced by the global market and fluctuations in the yuan's exchange rate, Liu said, noting that during the adjustment, it is possible that China might purchase more gold.

To confront downward economic pressure generated by uncertainties in the global market, China and other countries have been optimizing the structure of their foreign exchange reserves, Liu told the Global Times on Wednesday.

China's foreign exchange reserves expanded slightly to $3.1192 trillion at the end of June, up by $18.2 billion from May, according to the State Administration of Foreign Exchange.