China is poised to lose its place as the U.S.'s biggest creditor for the first time since the height of the financial crisis, blunting one of Mitt Romney's favored attacks in the presidential campaign.

Chinese holdings of Treasuries fell 0.2 percent this year through July to $1.15 trillion, the latest government data show. Japan, a stronger ally of the U.S., raised its stake by 5.6 percent to $1.12 trillion, on pace to top the list of foreign creditors by November. The Treasury Department will release its tally of international capital flows for August today.

While Romney promises to label China a currency manipulator if he wins the election and says President Barack Obama has been too lenient in trade disputes, foreign demand is a reason Treasury yields remain close to record lows, reducing the cost of credit for the government, companies and individuals. Whoever wins Nov. 6 will depend on both nations to finance a budget deficit that surpassed $1 trillion for a fourth year in fiscal 2012. The candidates hold their second debate today.