You're misinterpreting the situation completely. China is running a trade surplus vs USA which means China has lots of dollars. Because of foreign exchange policy it will not use the dollars on imports. The only thing the money can be spent on is financial assets. All the Fed does is lower interest rates in response to this "savings glut" and that is the right thing because oversupply should result in lower prices for anything including money.

Because of the reserve currency status almost every country on earth is running a surplus vs the US and buying their financial assets.