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China has been buying dollars/treasuries on a large scale and financing the US debt doom to a large degree for 10-20 years or so.
The problem is, now, if they stop buying in similar fashion to their previous appetite (de facto pushing up interest rates or forcing more naked money printing) or start to move more quickly away from dollars to Euros (which they were doing as stated policy last year, but I've not seen any comment on for the last 6 months).
With regards to the Yuan and the Yen, China and Japan being the two largest foreign holders of US debt, their scale of purchases would seem to ONLY be going down. As their export surpluses to the US deteriorate, the recycling trade from surplus dollars going back to the US as bond purchases will be scaling down.
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"I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}--
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