how do we do it? With cash or gold?
China has Treasury bonds on deposit with major financial institutions just like everyone else. When the bond matures, the bank removes the bond from the account and adds US dollars.
It works just like for you and me, except there are lots more digits involved.
With the interest payments, the Treasury issues dollars ("prints money") that are added to the bondholder's account. Except it isn't quite printing money, keep in mind that the Treasury gets money from lots of sources too, like taxes, bailout repayments, etc.