China has the world's biggest pile of foreign currency reserves, much of it held in U.S. treasury debt. China held $798.9 billion in U.S. Treasuries at end-October, displacing Japan in September 2008 as the largest foreign holder.
But China has shown no sign of trying to use that stake to punish the United States. Doing so, or even hinting that it could, would alarm global financial markets and push down the value of the dollar, thus dragging down the value of China's dollar-denominated assets.
However, China could potentially de-link its currency peg to the US dollar, which could cause an enormous world of hurt economically here.