In case you haven't noticed, the Fed no longer has much control over interest rates, money supply, economy or anything else. 9 Fed Funds cuts in one year, and long-term rates barely moved. The financial markets have evolved to the point where the Fed has very little influence. If the Chinese are dumping Treasuries, what's the Fed going to do? Buy them all? With what?
You've accidentally stumbled into the truth and don't even realize it. You don't know how the Fed creates money, do you? They "buy" treasuries from banks and "give" them a deposit slip that says "You have a balance at the Federal reserve of X billion dollars" The Fed could buy back the Chinese Treasuries without breaking a sweat.