I don't pretend to have an answer explaining china's intention in managing it's holdings in US bonds or it's large reserves in currencies , for sure they're trying to protect their own interest and they have to deal with the situation at hand .

There are not many alternatives to the US dollar considering it's the only currency liquid enough to invest large some of money and the precarious situation other so called reserve currencies are in now .

Gold is such a small market it represents petty cash for central banks , as for commodities or the stock market , values are relative to what the world economy will lead to in coming years .

As you say China can't get out of US bonds as they might wish to without jeopordising their investment in US dollars .

So they're using every mean available to diversify, including making deals with numerous countries in order to garantee future supply in key commodities and strenghtening trade agreements .

The reevaluation of the yuan even if it's a slow process will also play a key role in the future as they move on to increase national consumption along with salaries . Along with those changes they will have to move towards the higher end of production , although China is so vast both geographicaly as well as in terms of population that it means all changes won't be equal everywhere in the country , leaving room for socio-economic development and geographical pockets of ntensive labor industries where the government might give incentive to companies establishing themselves there .

And we must also remember that the whole region is intensly populated , and even though India can be regarded as a competitor it can also be perceived as a close by market , their proximity creates a stong incentive for trade agreements or complementary industries .

The whole region should continue towards greater economic integration in the future unless political events intervene negatively .

In any case China has definitely been diversifying it's holdings over the last 2 years while remaining in US bonds to protect the US dollar .

But it seems to me the trend is for the US dollar to lose ground gradualy and for the yuan to gain in parallel .

For a country in the situation China is in now , the success of their proceedings remain on a slow evolution of those changes as well as on coordinating those changes with those affecting it's most important trading partners along with the perks of the global economy , and the US is definitely key to that .

China has a history of moving slowly , it can even be argued that the communist revolution started some time in the 19th century , when the British turned around the trade imbalance they were in with China, ( wich was bankrupting them ) by introducing vast quantities of opium to Shanghai and the Pearl River region .

I tend to see China as a very conservative country and the US as a more revolutionary one .

But to conclude we are well aware that evolution hates straight lines and all the above projections might sound like a lot of bull in the future .

( Regarding the US reserve currency role here's a recent reference to it )

http://money.cnn.com/data/world_markets/americas/