According to this, it's far less than $10 trillion:

The U.S. debt to China is $1.19 trillion as of March 2018. That's 19 percent of the $6.29 trillion in Treasury bills, notes, and bonds held by foreign countries. The rest of the $21 trillion national debt is owned by either the American people or by the U.S. government itself.

https://www.thebalance.com/u-s-debt-to-china-how-much-does-i...

Also:

China held around $1.17 trillion of Treasuries as of the end of January, making it the largest of America's foreign creditors and the No. 2 overall owner of U.S. government bonds after the Federal Reserve.

from https://www.reuters.com/article/us-usa-trade-china-treasurie...

"If you owe the bank $100,000 the bank owns you. If you owe the bank $100,000,000 you own the bank." Not a perfect parallel to this situation, but a nice aphorism.

This is simply not true in when both countries can print currency, and the global markets are heavily reliant on the value of those currencies.

A similar way of looking at it that I've heard: The USA got hundreds of billions of dollars worth of manufactured goods and raw materials, while China got hundreds of billions of rows in a SQL database.

Of course that analysis leaves out the skills, experience, and intellectual property they also got. That's more significant than dollars.

China holds a lot of bonds. But there's not much there as far as leverage goes with that. Buying up those bonds let's the US and their consumers keep spending and that includes on Chinese goods.

Both nations are tied pretty tightly together in trade.

Less trade due to tariffs lowers the incentive for China to a) roll over the bonds and b) buy new ones. This will hit the US federal budget and in turn be noticable for everyone.

That is how you reduce the deficit: americans consume a lot, so the US borrows, and the deficit is high.

Put another way: one way, the easiest for the US, to reduce the deficit is to reduce consumption. This will happen more or less automatically with increased prices.

Another way is for the dollar to tank, which will also reduce consumption and increase exports.

The ideal situation (for Trump I assume) is to keep a strong dollar, increase exports, keep consumtion high and get the financing the US wants. It is difficult to see how this can be achieved, or whether this is fair for 95% of the planet's population, most of which are poorer and work as hard or harder than americans.

Interestingly you omitted the currency of that loan in your comment. Thinking on that should answer your question.

These bonds generally have a fixed term of up to 30 years, under what scenario would the US have to repay its bonds all at once, before they're due?

It wouldn't. The general threat is that China would sell these treasuries on the market and flood the supply. That would make it much harder for the US to sell new treasuries (which it does every quarter) and so the discount it would have to give would be higher (the bond yield would go up) and that would mean more expensive debt repayments in the future.

Ok, that's more realistic

Modern nations fiat debt, meaning their currencies ultimate value is derived from many things, but ultimately hard power. A $10 trillion diff doesn't mean much if it comes to enforcement.

Sure, but what could they do? Threaten to call the loan early? And if the US says “no”, then what?

What do you mean by “call the loan” ? Treasury bonds have a fixed payback schedule.

They can dump their treasuries on the open market satiating demand. This glut would make it extremely difficult for the US to raise the money it needs to fuel its record $1 trillion deficit.

They can do that, although they would lose an incredible amount of money with that dumping. Further, this must be considered an act of warfare executed through financial means. What makes you think the following will be true?

1) The Fed won't simply buy them all up, then unwind their position over the next few years.

2) China won't be subject to extraordinary DPRK-like secondary sanctions, minimizing China's ability to trade with those dollars and thus limiting the inflationary effect of those newly-printed proceeds.

3) The US will not retaliate with other coercive measures, like sector-wide sanctions on strategic Chinese market sectors, elimination of MFN status, removal from WTO, military pressure in the South China Sea, etc., which combined are likely more than enough to dissuade China.

We're already in a new cold war. If hacking power plants and publicly releasing government secrets to sway elections aren't acts of war, legal market activities like selling treasuries won't be either.

It would certainly be an escalation and the US would respond but its pernicious in its attack of the free market values of the US. Any response would be tacit admission that there are flaws in the capitalist system and as a result it would be more subdued than otherwise.

Any attack would not be motivated by money. It would be a striking blow at a weak US to knock it down from its super power perch.

I'm not sure it would have that effect. Such an action from China would almost certainly result in solidarity and coordinated action from basically the entire West. If others don't act, they're next.

I also don't see how a US response is somehow an attack on free market values. Dumping $1.2T of Treasuries onto the open market is not normal market activity. It's an attempt to manipulate and distort the market.

China wants to surpass the US, but while such a stunt might harm the US, it would do immense damage to China. I think it would be more like a striking blow alienating China from much of the global economy and financial system for a long time to come. That is surely not the route to surpassing the US as the preeminent world power.

Why would people who put their money in a nice, stable asset like Treasury notes dump it and take a huge loss?

This is a mutually beneficial exchange

That’s an interesting question. I have no idea how much China owns in Treasury debt, but it’s substantial.

So China has some disincentive to pushing down the value of the U.S. dollar lest that debt be worth less in the future, in addition to its desire to keep it up so we can afford to keep buying Chinese products.

Complex interrelationship. I think it’s safe to say there are no important issues that don’t play a role in this calculation, except human rights and environmental issues since there’s no indication that Trump would push on those anyway.

Major Foreign Holders of Treasury Securities

http://ticdata.treasury.gov/Publish/mfh.txt

China has $1.2 trillion, as of April 2018. Total foreign ownership is $6.2 trillion (this includes individuals, companies, countries, though it may miss some). Total debt is $21 trillion.

https://www.dallasfed.org/research/econdata/govdebt#tab3

Loans denominated in dollars, a currency they can print to payoff any debts as needed, save for its effects on inflation.

>save for its effects on inflation

That's a fairly large caveat. Zimbabwe tried it and it didn't work out too well. The Weimar Republic also tried it to similar effect.

They are not the best comparisons as there were other factors involved.

Zimbabwe has destroyed its farming output, Weimar had its industrial region occupied by France.

The US and EU have been running quantitative easing programmes for nearly 10 years and inflation is low.

It’s not pure cause and effect.

Yes I understand the situations are vastly different but that is not guaranteed in the future. The US is most definitely showing signs of decay and decline. Many more economically challenged leaders like Trump in charge and the situation could change beyond recognition. It only took one decision to destroy farming in Zimbabwe.

It may be a large caveat,but at least it doesn't try to frame national debt as the same kind of debt as households deal with when they take out a loan. It is fundamentally different. Debtors can't print money to pay off a loan.

Also inflation does not just happen if you print money. The increased demand has to meet a lack of supply. Most historical cases of hyper inflation involved disruptions to supply capacity. America is not really in that position, and I suspect this is one of the reasons we see few signs of inflation these days in America.