Well, yes, Americans pay the interest through their taxes.  The main problem is the budget deficit.  Our interest payments in America are rising at frightening rates, and I've got to believe that this is exactly what the Republicans want, because it will cripple our ability to finance our welfare state.

But remember that, if America collapsed, China (and/or our other lenders) would be left holding useless pieces of paper.  Trade creates "inescapable interdependencies," as von Mises -- whom, for the record, I despise -- rightly, I think, referred to it.  It's the beauty and, at the same time, the horror of capitalism.  A crippled America translates to very bad news in Asia.

At this point in time, America is still, easily, the dominant partner in the relationship.  But, if America does not use that dominance to demand a liberalized yuan, both countries will wind up in one hell of a mess in the future.  (And I, my friend, will be well-insulated in Europe. ;-)

Be nice to America. Or we'll bring democracy to your country.