More like, there is capital flight from China because there are economic problems and yuan devaluation is anticipated.
When people liquidate yuan assets and buy overseas assets, they sell yuan to the central bank, buy foreign currency.
In order to buy the yuan, China's central bank needs to supply foreign currency. To acquire the foreign currency, they sell foreign assets, e.g. Treasurys.
It's not so much they are trying to push the yuan up, as trying to prevent it from falling too precipitously as people sell it.
They are accommodating the capital flight by supplying foreign assets, instead of letting the yuan fall sufficiently sharply to the point that would stop capital flight, because investors would no longer expect further depreciation.
When people liquidate yuan assets and buy overseas assets, they sell yuan to the central bank, buy foreign currency.
In order to buy the yuan, China's central bank needs to supply foreign currency. To acquire the foreign currency, they sell foreign assets, e.g. Treasurys.
It's not so much they are trying to push the yuan up, as trying to prevent it from falling too precipitously as people sell it.
They are accommodating the capital flight by supplying foreign assets, instead of letting the yuan fall sufficiently sharply to the point that would stop capital flight, because investors would no longer expect further depreciation.