[DarthGhandi]

This isn't right, there's incentive for both parties to behave but anytime China can sell treasuries on the open market for below what they are worth driving up yields dramatically.

If the US tries to issue more bonds they'll have to match market rates or buyers will simply go to the secondary markets.

You're suggesting that the US could intentionally devalue it's own notes to financially hurt China, but that would also devastate every other holder as well as itself. Basically economic scorched Earth policy that even a madman wouldn't consider.