Russ Winter at the wallstreetexaminer.com did a good job of explaining what is going on behind the scene's with China's announcement to diversify their exchange reserves out of US dollars.

I warned investors last year about the possibility of this happening. Actually, it was my warning shot across the bow. Since nothing happened right away, many have ignored the warning.

As Russ Winter points out in his article, the initial Chinese response of backing sanctions against China is a threat to sell US Treasuries and inflict damage on the US economy. Winter said that the initial Chinese response is a classic form of Sun Tzu, “Art of War”.