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China's secret? It owes Americans nearly $1 trillion (This is not a typo)
Mcclatchy ^ | 05/21/2012 | Richard Parker

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 ...


TOPICS: Business/Economy; Foreign Affairs; Front Page News; News/Current Events
KEYWORDS: 2012; china; debt

1 posted on 05/21/2012 12:15:35 PM PDT by SeekAndFind
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To: SeekAndFind

Certainly puts a new spin on things.

All those foreign exchange reserves don’t look quite so large any more.


2 posted on 05/21/2012 12:24:52 PM PDT by mojito
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To: SeekAndFind

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...


3 posted on 05/21/2012 12:25:11 PM PDT by Little Ray (FOR the best Conservative in the Primary; AGAINST Obama in the General.)
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To: SeekAndFind

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.


4 posted on 05/21/2012 12:26:07 PM PDT by RatRipper (I'll ride a turtle to work every day before I buy anything from Government Motors.)
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To: Little Ray
$1 Trillion. Big deal. The regime spends that in what, 3-4 months?

That being said, I would if Taiwan would/could be willing to pay this debt over time if PRC would recognize their existence?

5 posted on 05/21/2012 12:28:50 PM PDT by kosciusko51 (Enough of "Who is John Galt?" Who is Patrick Henry?)
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To: SeekAndFind

“...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?


6 posted on 05/21/2012 12:29:01 PM PDT by SMARTY ("The man who has no inner-life is a slave to his surroundings. "Henri Frederic Amiel)
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To: SeekAndFind

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...


7 posted on 05/21/2012 12:31:46 PM PDT by PieterCasparzen (We have to fix things ourselves.)
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To: Little Ray
Like the PRC is EVER going to pick up the debt issued by the Nationalist Government of China.

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.

8 posted on 05/21/2012 12:34:54 PM PDT by Leaning Right (Why am I carrying this lantern? you ask. I am looking for the next Reagan.)
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To: Little Ray

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.


9 posted on 05/21/2012 12:37:05 PM PDT by In Maryland (Liberal logic - the ultimate oxymoron!)
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To: AdmSmith; AnonymousConservative; Berosus; bigheadfred; Bockscar; ColdOne; Convert from ECUSA; ...

Thanks SeekAndFind.
...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.

10 posted on 05/21/2012 12:45:10 PM PDT by SunkenCiv (FReepathon 2Q time -- https://secure.freerepublic.com/donate/)
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To: SMARTY

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.


11 posted on 05/21/2012 12:45:31 PM PDT by SeekAndFind
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To: SeekAndFind
Beijing paid British investors a miserly $39 million upon the takeover of Hong Kong in 1987.

The hand-over of Hong Kong took place on July 1, 1997.

12 posted on 05/21/2012 12:54:25 PM PDT by PGR88
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To: PGR88
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."

13 posted on 05/21/2012 1:09:04 PM PDT by Oratam
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To: Leaning Right

Good idea, but he’d have to pay off the investors, too.


14 posted on 05/21/2012 1:12:29 PM PDT by Little Ray (FOR the best Conservative in the Primary; AGAINST Obama in the General.)
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To: Leaning Right
Very true. Taiwan earned that seat by the role the KMT played during World War II in defeating the Japanese. The Communist Party's role in that war was basically limited to calling a truce in the civil war and then emerging after Japan was defeated to collect the leftover weapons to resume the Chinese civil war where they ultimately took over the mainland.

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.

15 posted on 05/21/2012 1:45:25 PM PDT by Vigilanteman (Obama: Fake black man. Fake Messiah. Fake American. How many fakes can you fit in one Zer0?)
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To: SeekAndFind

bump for later


16 posted on 05/21/2012 2:02:47 PM PDT by Wurlitzer (Nothing says "ignorance" like Islam!)
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To: Leaning Right
“Simply cancel the US bonds that China holds, dollar for dollar.”

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.

17 posted on 05/21/2012 2:04:42 PM PDT by ravager
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To: ravager
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?

18 posted on 05/21/2012 2:37:47 PM PDT by Leaning Right (Why am I carrying this lantern? you ask. I am looking for the next Reagan.)
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To: ravager

I don’t care. Thats the price you pay for shipping my jobs to china.


19 posted on 05/21/2012 2:37:47 PM PDT by mamelukesabre
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To: SeekAndFind

Warren Buffett owes a billion dollars too.


20 posted on 05/21/2012 3:16:14 PM PDT by a fool in paradise (Barack Obama has cut and run from what he called "the right war".)
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To: Oratam

Global Communists colonize nations and fuel insurgencies and the Left is cool with that.

Saudi Arabia’s theocratic government colonizes nations and fuels Islamist insurgencies and the Left is cool with that.

The talk of “anti-colonialism” was anti-WESTERNISM.

They love Third World dictatorships.


21 posted on 05/21/2012 3:19:12 PM PDT by a fool in paradise (Barack Obama has cut and run from what he called "the right war".)
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To: Little Ray

Carter recognized Taiwan as part of Communist China back in the 70’s at the demand of the Chinese.

Nowhere to point.


22 posted on 05/21/2012 5:03:50 PM PDT by <1/1,000,000th%
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To: SeekAndFind
Beware, McClatchy is politically left of Obama, they published this to help Obama in some way. Count on it.
23 posted on 05/21/2012 7:54:16 PM PDT by RJL
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To: SeekAndFind

I guaranty you you...the ChiComs consider all that debt to have been “forgiven”.


24 posted on 05/22/2012 7:26:55 AM PDT by BenLurkin (This is not a statement of fact. It is either opinion or satire; or both)
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To: Leaning Right

We already ignored it long time back.


25 posted on 05/22/2012 11:09:13 AM PDT by ravager
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To: Leaning Right
And those aren’t just a factory, they are a huge amount of American investor money.
26 posted on 05/22/2012 11:12:56 AM PDT by ravager
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To: Leaning Right; mamelukesabre
To be honest, China didn't not create this debt. WE did.

Its important to understand what it means to live within ones means. Cuz if you don't, then there consequences. There is no easy way out of this debt if that's what you are looking for. Chinese aren't fools to lend out so much money without holding something in co-lateral, so that one we can simply walk away from this debt. The only way out of this debt is to cut spending and make our economy grow at over 7-8% of the GDP.

27 posted on 05/22/2012 2:39:36 PM PDT by ravager
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To: PieterCasparzen

So, Communist Amerika will never honor any pre-Communist obligations, either. No worries! :)


28 posted on 05/26/2012 12:49:58 PM PDT by huldah1776
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