Beijing should move rapidly to diversify its foreign exchange reserves, buying more euro and yen rather than dollar assets, after U.S. debt was downgraded by one rating agency, a paper run by China's central bank cited local banking sources as saying.

"China can keep buying yen and euro; and in the dollar assets, China can cut its holdings of treasuries and institutional bonds for U.S. stocks and corporate bonds," an unidentified "expert" with the Industrial and Commercial Bank of China, the largest Chinese lender, was quoted by the Financial News as saying.

The newspaper report does not necessarily represent China's official stance. China's central bank and State Administration of Foreign Exchange, which manage China's stockpile of $3.2 trillion foreign exchange reserves, the world's largest, have kept silent since the first credit downgrade of U.S. debt.

Premier Wen Jiabao on Tuesday urged nations to work together to stabilise turbulent financial markets, but he did not mention China's own plans for managing its U.S. treasury holdings.

Ironically, investors have poured funds into U.S. treasuries as a safe haven in the aftermath of the downgrade by Standard and Poor's, which helped trigger a global selloff of stocks amid worry about the global economy.

About two-thirds of China's foreign exchange reserves are dollar-denominated assets, and most of the dollar assets are estimated to be treasuries, economists said.

As such, China is in need of a "new idea" to manage its reserves, the central bank's newspaper said.

However, the paper added that it's not easy for China to find alternatives to U.S. treasuries.

"There's no other treasury market in the world that has a similar depth or status to the U.S. treasury market; the European debt crisis is still unfolding; and emerging markets have their own problems of inflation and unreasonable economic structures," it added.

Separately, the International Business Daily, a paper published by the Ministry of Commerce, said on Thursday that China's recent reduction in holdings of Japanese government bonds was a "normal small adjustment" in its investment portfolio.

"The operation was just a tiny move in portfolio adjustment," Liang Meng, a researcher with the Chinese central bank, was quoted as saying.