What does it mean if you become a major creditor of another person?

Japan now has replaced China and become the largest creditor of the US. Such relationship does not involve economic and financial factors, but involves political concerns as well. Politics is extremely complicated and many factors are unknown to the public; therefore, I would only talk in economic and financial terms about being creditors in a more general sense.

We could become others' creditors in our normal life. When we open a saving account and put our money in the account, then the bank owes your money and you become the bank's creditor. Why do we want to lend money to others?  Economics teaches that we are making our decisions to maximise our own personal expected preferences, so the decision about whether or not to lend money is based on the return of lending and the risk of defaults and opportunity costs.

Once you becomes someone's creditor, then as the money you lend is also part of your wealth, your wealth becomes partially depend on your debtors' default risk and performance and the financial environment. When you are a major creditor and a large proportion of your wealth depends on your debtor, then your interest is to help your debtor to generate greater returns by using your money and lower its default risk. However, on the other side, your debtor could lose incentives to make more money, as your debtor has to pay you interests and lower its returns and growth. When the profits gain reduces, the incentives to work hard will decline as well. Meanwhile you cannot directly influence your debtor's decision making process, the more money your debtor borrows, the higher default rate your debtor has, as the incentives reduce due to lower profit levels.

Therefore, becoming a major creditor is carrying your debtor's risk upon your shoulders without having direct influence on managing the risk.