China could have very easily dumped all of their holdings by now. They're choosing to hold that pile. It's no longer a meaningful pile of treasuries vs the overall size of the US Government debt load.

Ignorant people used to joke that China owned the US because of their treasury position (despite the fact that Japan's holdings were roughly as large). Well that position has been massively diluted over the past decade and is now largely meaningless. The Fed can eat China's position with a snap of its finger.

It's to China's benefit to hold the position, at present.