Let me suggest this: that the Chinese government realizes all too well that investment in US dollars is the best weapon in their defense against the US. A run on the dollar caused by a large scale Chinese divestment of US dollars would have a staggering impact on the US economy.
But if they did that they would suffer significant capital losses, so why would they do that? Well, you have to figure that war costs - any way that you look at it. So, if what you're spending your defense budget on is absorbing the impact of a massive capital loss instead of a massive loss in war action, then it becomes an acceptable strategy, especially if you're a nation with no hope of matching the US in military capabilities.
In the unlikely event of an escalation of conflict between the US and China (oh, let's just say over the Taiwan issue, for instance), it would take little more than the threat of rapid divestment of US dollars to bring the US government into compliance. The Chinese government also realizes full well that in order to maintain this defense against the US, the runaway US trade deficit with China must continue to be expanded. In fact, one could say that it's largely US citizens eagerly buying up cheap Chinese goods, through such all-American stores as WalMart, that is helping to secure China's security hold over the US. Talk about sponsoring communism!
So, what to do? I think the first step is getting everybody on the same page in recognizing that the current nature of our trade relationship with China is a great risk to the US. I refrain from using the term "threat", because that's just the kind of language that militarists would like to use. But, regardless of your preference of terms, the risk to America's economic stability is unacceptable.
Now, it's not that I'm against trade with China, I just feel that the current state of the relationship is far too precarious. In fact, one might more accurately characterize our current situation as a predicament, rather than as a relationship.