As a reminder, commercial banks create most of the new money in circulation through lending (literally creating money out of thin air) — and that is particularly the case with overseas banks that loan dollars (the Eurodollar market).

Banks do no create US dollars. They create dollar-denominated credit that can only be retired with actual US dollars. If they could create those US dollars they wouldn't take the risk of making loans and would simply create what dollars they might want.

Our Federal Reserve system makes it possible to spend that credit across different banks so that it appears to be actual money, but it is all based on the ability of the US govt to guarantee payments in the banking system.

China is selling Treasuries because they desperately need dollars to service dollar debts and to buy goods traded in dollars.

They had those dollars when they bought the Treasuries. Only US dollars can purchase them. They are probably selling off some long-term debt instruments that have a much lower yield than is now being offered to purchase energy or other resources priced in dollars. They would take a serious hit on them, but it might fit into their plans better than simply using dollars they get from trade. Or they may be seeing nonsense like sanctions, that we previously only used against our enemies, as a future potential.