Debt in today’s world is highly interconnected and America’s debt functions as a form of currency. Our debt China purchased is likely used as collateral or payment to others outside of China. Maybe it’s collateral to German businesses for machinery, payment to the Saudi for oil and reinvested in our own American businesses.
The nullification of the China debt would snowball around the world destroying financial markets and the businesses and countries it connects to and whatever they connect to and so forth. This would destabilize the worlds’ economies, including our own.
Think of it this way: the worldwide financial crisis of the late 2000s was the result of a small bit of interconnected debt gone bad. The result was the worldwide Great Recession which pushed up our unemployment, crippled seniors in retirement, slashed housing values and so forth.
If we were even able to nullify our debt to China, which is doubtful, that huge amount highly leveraged debt would not do nice things to our own economy. Thus it will not be nullified.