You'd better learn to speak Chinese. :-)

China cannot "call in" its debt. Treasury securities have a term to maturity ranging from 1 year to 10 years (soon, 30 years). Treasuries are sold at a discount and pay face value at the maturity date. China's holdings do not mature all on the same day. Let's put China's holdings into perspective. About half of all US debt is held by the Federal Reserve and the US government. The other half is privately held. Of the half which is private, about half of that is foreign held. So 75% of US debt is to OURSELVES - in the future. Of the part that's foreign held, China holds about one-fifth of that. So China has about 5% of US debt. If they tried to sell 100% of their US securities in one day, they would face an adverse price response. They'd have to sell at a discount. That would hurt them far worse than it would hurt us. Furthermore, since the Fed holds ten times as many securites as China, they could easily offset the entire impact by a counter-strategy. But "China" isn't all the Chinese Government. Their Central Bank holds about 63% of their US treasury holdings. The other 37% is held by Chinese institutional investors. The government is holding these reserves in order to hold down the value of their currency. Chinese institutional investors are holding them as a safe and sound investment. We've traded China little pieces of paper in exchange for goods we want: mostly computers, computer parts, and toys. We pay interest on those pieces of paper with more pieces of paper. If China wants any real benefit from all that paper, it must eventually BUY AMERICAN GOODS or INVEST in our economy. Either way, those dollars will come back here to help our economy. If you fret about foreign ownership of US assets, console yourself with the fact that China just took a massive beating in US equities, Mortgage Backed Securities and west coast real estate. So, in summary, China holds a small portion of our total debt and even if they decided to unload all of it, they could do little damage to us and a lot of damage to themselves.

They probably hang up.....

Well regardless what happens, the federal government cannot pay off those treasury notes. What the feds will do is go to the Federal Reserve Corporation and borrow the funds at interest of course. This will increase the national debt "we the people" must pay for but cannot ever do so. All of the taxes paid by "we the people" only pays for a small potion of the interest owed by "we the people" to the Federal Reserve Corporation. We never get to pay on the principle! So regardless of what China does "we the people" lose!