The roughly $1 trillion of US debt that China holds is a risk but not an unmanageable one as that equals only around 4 percent of the roughly $28 trillion outstanding (as of May 2021). However, because other countries realize that actions taken against China could be taken against them, any actions taken against Chinese holdings of dollar assets would likely increase the perceived risks of holding dollar-debt assets by other holders of these assets, which would reduce the demand for such assets.
