Fast question:
Its 1993, would you rather have US Dollars or Chinese Yuan for the next 20 years? If you said Yuan, then you owe me money. In October 2003, the Chinese devalued their currency by 50% versus the USD.
http://www.oanda.com/currency/historical-rates/
Currency Cross is USD (Currency I have) to CNY (Currencies I want)
In that time, the US had fueled the rise of China because of long-term currency manipulation of the Yuan by China. This has fueled Chinese manufacturing boom but completely screwed Chinese consumers by artificially reducing their buying power. So the Chinese now sit on a a huge chunk of US debt because the best way to continue the yuan's manipulation is buying Treasuries and selling yuan which helps China compete. That 50% has moved to 14% even though China's market grow rate has been multiple of the the US over that time almost 20 years ago.
The Chinese can't stop buying debt without putting themselves at significant risk. Of course, if the US goes down as you say - that would loot the Chinese Treasury. The Chinese have tried to diversify out of US debt see all base metals and other commodities, but every time they have increased that commodity pricing exponentially. USD debt is still the largest and most liquid market there is. You can go buy 3 - 4 billion in debt and not make a hiccup. Do that in Gold, Copper, Aluminum, Silver and you can move that market by 10% and cost you amazing amounts.
So we continue this charade. The Chinese talk about wanting to diversify from USD (they can't because they need the currency advantage still and doing so impacts their own). And the US continues to talk about the Chinese manipulating its currency but we don't care because they have to buy our debt.