I'd guess that the Chinese are not pleased with us these days. Maybe that's why they have explicitly said they need a guarantee that the dollar will not devalue and ruin their treasury holdings.
“In talks with Clinton, China will ask for a guarantee that the U.S. will support the dollar’s exchange rate and make sure China’s dollar-denominated assets are safe,” said He in Beijing. “That would be one of the prerequisites for more purchases.”
“These comments are some sort of a threat but of course China can never get such a guarantee,” said Thomas Harr
, a currency strategist at Standard Chartered Plc in Singapore. The U.S. may assure China that it will clean up the financial system and that it “won’t push for a weaker dollar but they can’t promise not to increase the fiscal deficit,” he said.
We'll never be able to pay back those trillions unless we devalue the dollar. Maybe this demand is a play for us to raise interest rates on the treasuries? If we do that, the US government will self destruct from humongous interest payments on the debt. Seems like we've got a Catch-22 game going on.