Idle Chinese Threats

Chinese officers within the People's Liberation Army (PLA) suggested to the Chinese government that it dump American bonds to punish us for out recent $6.4 billion arms sales to Taiwan. Word of this came after the Chinese government's renewal of an admonishment to Obama not to meet with the Dalai Lama, who they consider a traitor. (Obama did not meet with him after the initial mandate, but plans to meet him on his next trip to Asia.) A massive divestment of U.S. bonds could significantly destabliize the market as China has the world's biggest pile of foreign currency reserves, and approximately $798.9 billion of it is in U.S. treasuries. However, many see these threats as idle, as a negative impact on our economy, and the dollar, would have a devastating impact on China's U.S. holdings. I assume there will be no talk from Beijing about dumping bonds in the future but that there will be a continuous flow of skits like this (http://www.youtube.com/watch?v=pL9Dd2IT7EU) on SNL.