Roy,

The point is that Treasury bills, notes and bonds are the most fungable asset on the planet. Even more fungable than gold at the present time. Look at the steep drop in 10-year treasury bond rates in the past few weeks. That’s the result of increased demand. There’s nothing to stop the Chinese from selling those instruments at any time before maturity. The only restraint on them is the age-old demand-supply equation. If they flood the market, the value of their instruments plumment, so they must sell carefully. But sell they can and may.