China reduced its holdings of US Treasuries to $1.1035 trillion in August, the second consecutive month in which the holdings dropped, according to data released Wednesday by the US Treasury Department.

China, currently the second largest foreign holder of US Treasuries, cut its holdings by $6.8 billion in August, following a slight drop of $2.2 billion in July.

Japan surpassed China to become the largest foreign holder of US Treasuries in June, after boosting its holdings by $21.9 billion in the month. In August, Japan's holdings of US Treasuries increased by $43.9 billion to reach $1.1747 trillion.

Combined, the two Asian countries held about one third of the total foreign holdings of US Treasuries in August, the department's data showed.

Overall, foreign holders of US Treasuries had $6.8575 trillion of government debt in August, up $225.6 billion from the previous month.