Reuters Business Channel | Reuters.com

Reuters Business Channel | Reuters.com: "By Kevin Yao and Benjamin Kang Lim

BEIJING (Reuters) - China should trim its holdings of U.S. debt, a senior Chinese official said, rattling markets on Tuesday in the run-up to a visit by President Hu Jintao to Washington this month.

As China is a leading financier of the U.S. current account deficit and holds the world's largest foreign exchange reserves, the comments from Cheng Siwei, a vice chief of the national parliament, sent the dollar and U.S. government bonds lower.

The comments could add to the contentious issues that will come up during Hu's visit, notably what some U.S. politicians and companies see as currency manipulation by China, accused of holding down the yuan to gain an unfair trade advantage."