One of the reasons US bonds have value (in addition to the depth of the bond market) is because the US has yet to ever renege on any of its debt obligations. The value of that trust far exceeds the value of the debt that China holds.

It’s amusing to see that some people still think that the U.S. can “punish” China without there being an equally problematic blow back. It’s a comforting thought that is out of touch with reality.