"China" is a rather vague definition.
Chinese manufacturer's make products, which are sold to customers in the US (in this example), in US Dollars. But these aren't much good to the manufacturer (i.e. he doesn't really want to pay his employee's in USD, or at least the Chinese government wouldn't approve of that), so he sells the USD to the People's Bank of China, who use these dollars to buy Treasury Bonds. In return, the People's Bank gives the manufacturer the amount of Yuan that it thinks is appropriate.