What US bank would fail from China selling it’s T-bills? It would pound the Chinese banks, not the US banks. In fact, because China would have to price the bills at below-market value, you’d see a lot of US banks picking up heavily discounted T-bills, strengthening their own bottom lines.
China dumping the bills on the market would crush China economically, and really do nothing to the US long term (short term there may be some jittery folks who will dump along with China, causing a bit of a bump but nothing serious).
Nope, see post 15.