So China can destroy the US economy by cashing in all those bonds huh?  No...think again...put simply by George Friedman...

"While China thus lacks politico-military options to counter the Tibet pressure, it also lacks economic options. It is highly dependent for its economic well-being on exports to the United States and other countries; drawing money out of U.S. financial markets would require Beijing to put it somewhere else. If the Chinese invested in Europe, European interest rates would go down and U.S. rates would go up, and European money would pour into the United States. The long-held fear of the Chinese withdrawing their money from U.S. markets is therefore illusory: The Chinese are trapped economically. Far more than the United States, they can’t afford a confrontation."

This means that if the Chinese take out money from the US (there by having a bunch of useless dollars unless they buy US goods...which supports the US economy) then they have to put it somewhere, and wherever they put it raises interest rates making that economy less profitable and so people in those economies will take their money and move it where it is more profitable...in this scenario - the US which just had its interest rates plummet as China pulled all its holdings.

If China just sat on the money - the US may limp along, but China would be utterly ruined (30% of its trade being with the US).