Treasury Secretary Steven Mnuchin said Friday he isn't worried about China selling its stockpile of U.S. Treasurys in retaliation over trade because there's plenty of demand for U.S. government bonds.
"If they decide they don't want to hold them, there are other buyers," Mnuchin told CNBC's Geoff Cutmore. "And, obviously, that would be very costly for them to do."
"They're looking at economics the way we're looking at economics, so it is not something I'm losing any sleep about," Mnuchin added in the interview from Bali, Indonesia, where the International Monetary Fund and the World Bank were holding their annual meetings.
Top White House economic advisor Larry Kudlow told CNBC on Thursday the White House was working on a meeting between President Donald Trump and Chinese President Xi Jinping at next month's G-20 summit in Argentina.
The leaders of the world's two largest economies will be getting together at a time when Washington and Beijing are locked in a trade war that's seen each side imposing tariffs on each other's products.
Most recently, the U.S. levied duties on $200 billion worth of goods from China, prompting Beijing to put tariffs on $60 billion worth of U.S. goods.
Some have speculated that China could hit back at the U.S. in a far more significant way: selling a huge chunk of the more than $1 trillion of U.S. Treasury bonds it holds.
China has collected billions in interest payments from the bonds.
In the interview, which aired on "Squawk Box," Mnuchin said a Trump meeting with Xi at the G-20 summit would happen if the administration believed it would be positive.
"These tariffs are very important negotiating tools," Mnuchin said. "If it looks like we can make positive direction, then I'm sure the president will have the meeting."
The Trump administration launched its tariffs campaign in the spring to try to get China to change what the U.S. feels are unfair trade practices and theft of intellectual property.
In the interview, Mnuchin also said the stock market plunge this week was a "natural correction."
—CNBC's Bryan Borzykowski contributed to this report.