Reply To: When China unloads it's US treasury bonds


Yes, the U.S. Treasury department has to pay the to the holder of T-Bonds, T-Notes, and T-bills the interest due each period and the principle on maturity. Someone who is holding Treauries can maintain his overall amount by buying more as some of them mature and are paid off.

As you can see from the following chart, China has been reducing its holdings overall in the last few years and now holds around $1.2 trillion:

Someone who is holding Treasuries can sell them right now for cash in capital markets to other holders or buy Treasuries right now from other holders. But these secondary market trades do not involve the U.S. Treasury directly.