They can "sell" a lot of it back to the US government. The debt is held in bonds that mature. Big bondholders regularly roll their bonds over, so it acts as if they're just holding the same debt indefinitely. But some fraction of their bonds mature every month, and if they don't buy new ones, the government has to give them their money.

It doesn't directly impact the dollar, per se, but it does mean that the government has to find the money elsewhere to continue operations. If it has to look harder, it will have to spend more, and that ultimately has to be backed by the taxpayer.

They could sell it back onto the open market and convert it to USD. Alternatively they could wait for it to mature and get USD.

The key thing here isn't about the reserves, its how they they acquired them by creating a swap on USDCNY from Chinese exports from their reserves - effectively holding the Yuan from appreciation.

The other thing is for the trade deficit to decrease the reserves need to decrease too. The reserves, especially the way they were created using swaps give a proxy of USD held savings held but not yet poured back into the US (and hence creating a trade deficit).

This is all of course useless if the holder of those bonds is still China, but through another country such as Belgium with an overseas account - which they've done before.