No money down, no credit check, no job mortgages was the stimulus for the meltdown, not China investing in America. Would you prefer they reinvest our debt somewhere else?
You yourself cited the potential use of debt as a cudgel, as a punitive measure. Do you think this is good? Where did China get all these dollars in the first place? Is that good?
And, lastly, if China "reinvested our debt somewhere else" it wouldn't be our debt, now would it?
The relaxing of credit standards is another matter entirely, yet another attempt at racial gerrymandering with unintended consequences. Consequences which were greatly aided by virtue of very cheap money, courtesy of China having bought so many treasuries and thereby depressing the benchmark for mortgage rates.
Sort of a trifecta, wouldn't you say? We're paying to industrialize them, they're investing dollars in treasuries to use as a weapon if we don't behave to their liking, and it's wrecked the financial system.