I read a bit about it. China and Japan have sold a small part of their dollar reserves likely for the same reason the stock market went up, they anticipate US stimulus by the Trump administration (strong economies are bad for bonds). Also there are buying yuan to strengthen their currency, for reasons that are not clear to me--probably something political.
But these are short term issues. The point I am making is our trade deficit has resulted in the export of trillions of US dollars to China. These dollars have to be spent in order to recover their value. The fact that there is a trade deficit means these dollars are not being spent on US goods and services. The place you can spend dollars and get something for them is in the US, And if they aren't buying dollars then they must be buying assets. Assets include a lot of things besides government bonds: stocks, corporate bonds, real estate.
http://www.policonomics.com/net-capital-outflow/
But these are short term issues. The point I am making is our trade deficit has resulted in the export of trillions of US dollars to China. These dollars have to be spent in order to recover their value. The fact that there is a trade deficit means these dollars are not being spent on US goods and services. The place you can spend dollars and get something for them is in the US, And if they aren't buying dollars then they must be buying assets. Assets include a lot of things besides government bonds: stocks, corporate bonds, real estate.
http://www.policonomics.com/net-capital-outflow/