But you can void all debts owed to China from the FED and clear the debt by a few trillion. Then China holds no markers against the USA. And the US Gov will void the debt owed to the FED. Poof, instant spiral for China.
China only holds about one trillion in Treasuries. It is not worth damaging confidence in Treasuries, for one trillion dollars.
We have lots of other tools to use.
Why wouldn’t China ramp up its dumping of US treasuries now?
They could buy more gold or use it for a war.