China Passes Japan

China has passed Japan as the largest holder of U.S. debt.China's holdings in Treasury bonds rose 43.6 billion dollars to 585 billion in September,while Japan had 573.2 billion.Total Chinese holdings may be 800 billion,as it may be buying bonds from third parties as well,which isn't immediately registered.By purchasing U.S. bonds,China keeps the dollar strong versus its own currency,the yuan,which makes Chinese exports cheaper than U.S. exports.That means U.S. companies are less competitive in foreign markets than Chinese firms.If China were to sell its U.S. bonds,that would raise interest rates on many loans in the U.S.,since the U.S. would have to pay more interest on Treasury bonds to attract new buyers.