Unless I'm wrong, the trade defecit is not a measure of China's holdings of US dollars. For example, they might have used the dollars to buy oil. Now the Saudis can claim real goods from America with them.
Discussion
I don't know how they measure it exactly but in the simplest conception, if the US provides 500 dollars worth of goods and services while getting 1000 dollars of goods and services from other countries, then there are 500 dollars that may come back. So whether the Saudis use them or the Chinese use them, the money might come back to the US. Or it could be held and used abroad. There may or may not be a problem. It seems that the 500 dollars will eventually come back to the US. If the US has exported its inflation to an extreme degree, it means eventually non-US people will eventually come to own the US, right? Maybe that means better stewards take over those resources, the US deserved it. Or maybe the dollars never come home. Or maybe the proportion is such that it's never a problem. But I think there is a potential problem if people do not actually want people from Saudi Arabia and China to be their new bosses.
This is one reason the dollar loses value. The debt shrinks in real terms, so they aren't paying full price for anything. The other reason is to light a fire under people's wallets so that they spend faster.
The US national (federal) debt is 35 trillion dollars (most of it owed to itself in weird bookkeeping). The M2 money supply is 21 trillion. The US current account (total, worldwide) is -311 billion (billion, not trillion).
Japan holds about 3% of US debt. China is second with 2.6% of US debt, which is $860 billion. $860 billion is far less than 21 trillion or 35 trillion.
And if anybody wants to get mad that foreigners have claims on the US... get mad at Japan.... although Japan is more than 200% of GDP in debt itself.