[wisty]

They devalued the yuan a bit, and probably want to keep it where it is now.

China runs partly on low interest rates on deposits. That means savers are effectively subsidising loans to businesses. Chinese savers are already looking for other places to park their savings (stocks, real estate, offshore), and China doesn't want to add more inflation as another reason to withdraw from banks.

I guess they figure that buying and selling US bonds is a way to control their target exchange rate (which they probably want to keep fairly stable) without messing other variables up too much, because the global market for bonds can soak it up.