don't expect a quick sell off,... Now, there's a comfort... China won't sell them because "China would not have anyone to sell the securities to"
So instead of accumulating more Treasuries, China is plowing U.S. dollars into inflated U.S. stocks, agencies (tied to horrendous fundamentals in the U.S. housing market), junk bonds, and other garbage.
Why is it that foreigners always buy market tops (first Treasuries, now equities)? Regardless of the answer to that last question, there's always a buyer at the right price. That holds true for housing, Treasuries, and even CDOs.
There’s no denying that China has cut back on Treasury purchases. In fact, avoidance of U.S. Treasuries in now approaching a near mania everywhere, even as funding can easily be found for the junkiest of junk offerings (not related to housing). But is there any reason for China to do a wholesale dump? I personally doubt it.