China buys US debt as a mathematical consequence of trade imbalances. Moreover, Japan and China are more dependent on the US for their export model than the other way around. The odds China or Japan would not take US dollars is virtually zero. Both economies would crash without exports to the US. China's unemployment would soar and so would political unrest.
With today's interest rates on 10 and 30-year bonds, and the government's financial condition, can't understand how anyone would want to hold that paper. Inflation will wipe out the meager return rapidly and long-term you're going to lose principal. China wants to protect what they have invested, but why buy more? Of course, European debt looks worse in some countries. China is going to have to buy precious metal or something other debt from over-leveraged countries.
If it flattens the yield curve how will that spur lending and improve the economy? It would seem this is government debt smothering out the private sector. What their doing is selling short term debt to buy long term debt and trying to push out the day of reckoning from a over bloated government who doesn't like diets.