Posted on 05/21/2012 12:15:25 PM PDT by SeekAndFind
China has a secret: It owes American investors hundreds of billions of dollars.
The Chinese government doesn't like to talk about it and the U.S. government doesn't want to raise it. But decades ago, Beijing defaulted on debt owed to Americans, as well as investors and governments around the world. In one case, it was paid. In the rest it was not. More than 20,000 American investors own this debt. The U.S. government may also own Chinese war debt, unpaid since World War II.
With the simple stroke of an executive proclamation, President Barack Obama can begin the process of addressing this issue. A 1930s-era law has established a quasi-public agency within the Securities and Exchange Commission, known as the Corporation of Foreign Securities Holders, which can arbitrate this dispute, much as a predecessor agency did for decades. China can both afford and benefit from this solution; it will afford goodwill at a time when relations between the world's two superpowers are strained.
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.
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.
(Excerpt) Read more at mcclatchydc.com ...
Certainly puts a new spin on things.
All those foreign exchange reserves don’t look quite so large any more.
Sure. Like the PRC is EVER going to pick up the debt issued by the Nationalist Government of China.
More likely they’ll say “Not me!” and point to Taiwan...
Did not know him well, but I met a lawyer years ago that owned a small bank holding company. He got on the wrong side of the State Department for suing the Chinese government for collection of railroad bonds issued before the commies took over. I can’t remember any details except that this guy was a real horse’s patoot. I was a twenty-something bank examiner in those days. . . a long, long time ago. Point being: I do not doubt one bit the veracity of this story.
That being said, I would if Taiwan would/could be willing to pay this debt over time if PRC would recognize their existence?
“...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...”
I wonder if this figure includes the millions Madam ‘Cash-My-Check’ stuffed in her pockets?
Communist China will never honor any pre-Communist obligations.
In other news, the U.S. Treasury found some coins under the sofa in a waiting room. They feel this is a good start on repaying $16 trillion on U.S. Treasury debt.
That and other tales of desperation after this commercial break...
Well, the PRC took the Nationalist Government's seat at the UN, so it seems to me that the PRC is on the hook for all Chinese-related debt.
I know what President Trump would do here. Simply cancel the US bonds that China holds, dollar for dollar.
If they point to Taiwan as the legitimate successor government to the Nationalists, thye make nonsense of their claims that Taiwan is a rebellious province of China. I doubt they will do that.
...decades ago, Beijing defaulted on debt owed to Americans, as well as investors and governments around the world. In one case, it was paid. In the rest it was not. More than 20,000 American investors own this debt. The U.S. government may also own Chinese war debt, unpaid since World War II. With the simple stroke of an executive proclamation, President Barack Obama can begin the process of addressing this issue... China can both afford and benefit from this solution; it will afford goodwill at a time when relations between the world's two superpowers are strained.
RE: I wonder if this figure includes the millions Madam ‘Cash-My-Check’ stuffed in her pockets?
Of course. The ChiComs can always say, take that up with the Kuomintang party IN TAIWAN. THAT WAS THEIR OBLIGATION, NOT OURS.
The hand-over of Hong Kong took place on July 1, 1997.
I remember watching it on TV. The actor Brian Blessed served as MC. I remember a NY anchorette, Dana Tyler, commenting "Wow! The end of colonialism. Amazing."
Good idea, but he’d have to pay off the investors, too.
Then there was the boatloads of defective drywall the Chicoms shipped us during the construction boom in the last decade. The sulfur content in that drywall was so high that electrical wiring was starting to rust. That entire issue got put on the back burner when Obama needed the Chicoms to finance his pork-laden stimulus bill. It is time to tally it up.
bump for later
Its not so simple. You would only cancel a piece of paper. All the co-lateral assets such as US companies and share holder investments are inside China. Chinese government can simply walk in and take possession of those assets.
That's an interesting point. But must we ignore the debt the Chinese owe us just because they might seize a factory?
I don’t care. Thats the price you pay for shipping my jobs to china.
Warren Buffett owes a billion dollars too.
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