Via McClatchy:
The story begins nearly 100 years ago, in 1913, when the government of China began issuing bonds to foreign investors and governments for infrastructure work to modernize the country. As the country fell into civil war in 1927, paying these debts became increasingly difficult and the government fell into default. Even so, in April 1938, the Nationalist government of China began to issue U.S.-dollar denominated bonds to finance the war against Japan's brutal invasion.Bianco, who is doing media interviews on this topic, is not happy about China reneging on this debt while purchasing American banks and AMC movie theaters.
Locked in a pitched battle for survival, the government issued these bonds into 1940. As part of its wartime financial aid, the U.S. government further provided a $500 million credit to China in March 1942, shipping gold there and helping to stabilize the currency. In return, it appears that the U.S. government redeemed some of these dollar-denominated bonds. But China doesn't appear to have repaid this debt either, according to State Department records, and the declaration of the People's Republic of China in 1949 ended decades of political, military and financial cooperation.
While successor governments are usually bound by the debts of predecessor governments, the new Communist government refused to pay any of these claims. The issue lay dormant for decades, just as the bilateral relationship did. Then, in 1979, as part of normalizing relations, Washington released government financial claims regarding the expropriation of American property and appears to have dropped the matter of the war debt entirely. However, it is one thing for government decision-makers to let go of government debt, however questionable that is.
And it is entirely another thing for individual citizens to press their claims. Some U.S. investors tried to sue the Chinese government in the 1980s and 1990s. However, the Foreign Sovereign Immunities Act makes it very hard for any U.S. citizen to sue a foreign government in U.S. courts because the law generally says that U.S. courts do not have jurisdiction.
The law usually only allows the jurisdiction of U.S. courts if a foreign government waives its immunity, commits a tort or seizes property. Recent additional exceptions have been added for terrorism. China lost an initial summary judgment for failing to appear in court but, with the urging of the U.S. State Department, later appeared in court and successfully argued that U.S. courts did not have jurisdiction.
Today, the Chinese bonds held by U.S. investors may be worth as much as $750 billion, according to Jonna Bianco, president of the American Bondholders Foundation, who estimates the value of bonds held by investors worldwide may be $10 trillion, including interest and penalties for default.
Via Special Guests:
Jonna Bianco, president and founder of the American Bondholders Foundation (ABF) says that if China is the economic superpower the world believes it is, they should now begin paying back this debt to its American bondholders and the American people. Instead, China is ignoring these obligations and buying things like banks and movie theaters on American soil.It appears that both the Bush and Obama administrations have refused to press this issue. That said, the American people were bilked by their own government in 2009 to the tune of $787 Billion in stimulus and now, if reports are true that the Obama administration could forgive China's debt to Americans, we could be bilked again for about the same amount.
“Is it not enough that the bulk of our manufacturing base has shifted over to China placing millions and millions of Americans out of work? Is it not enough that China continues to provide ammunitions and weaponry to our enemies that are killing American troops overseas? Is it not enough that China continues to steal our intellectual property/trade secrets/patents making knock off products that they dump around the world costing American Businesses billions and billions of dollars in losses? Is it not enough that China has continued their cyber warfare attacks against American people, businesses and the American Government? Is it not enough that China continues to manipulate its currency? Is it not enough that China continues massive unfair trade practices? Is it not enough that China continues to support the North Korean and Iranian Nuclear Programs which continue to threaten the safety and future of America? At what point will Americans say....ENOUGH IS ENOUGH!!!! No More! We must stop the double standards that China has and make them pay their bills!
In fact, in an email response I received from Bianco about how much we owe China vs. how much they owe us, she replied:
"China owes the U.S. including its bondholders more than we owe them by far!"More on this subject at American Bondholders Foundation.
2 comments:
Ben barrack
I ran across a book a year or so ago by three economic professors from the Pennsylvania Wharton School, that seem to indicate as much as $10 billion dollars was loaned to China on or before 1939. This debt was reneged upon in 1949 by the new Chinese Communist nation. In 2 different amounts in 2 different times I calculated by the exponential function, that China might owe America $10 Trillion dollars. Can the BIS decide which debts are legit and which debts can be reneged upon?
Three Pennsylvania Wharton School Economic Professors wrote a book in 2009 regarding the "Financing of Modern China". I believe the details were $1 Billion & $9 Billion loaned over several decades, that these loans were reneged upon by Chinese Communists in 1949. Can you confirm the title and authors of this book?
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