The Lewisburg, Tennessee-based American Bondholder Foundation holds $1.6 trillion of century-old Chinese debt, including interest, dating to before the founding of the communist People’s Republic of China, that it wants the administration’s help in redeeming. There is an estimated $6 trillion or more of the debt outstanding worldwide.
The bonds were issued by the Republic of China — which ousted the imperial government in a coup — as far back as 1912 and backed by gold; they were defaulted on in 1938. The ROC government fled to Taiwan, where it remains the official ruling body, after Mao Zedong’s communist party took over following the 1949 end of the revolution.
Beijing maintains Taiwan is part of China, and under international law, successor governments are responsible for the debts of their predecessors.
President Trump is a “’promises made, promises kept’ president, and he said to my face that he was going to do this transaction, do this deal, and hold China accountable,” Jonna Bianco, president and chairwoman of the American Bondholder Foundation, told FOX Business.
Bianco, who has power of attorney for 95 percent of the thousands of U.S. bondholders, said making China repay its debt would “not be punishment,” but rather a basic fundamental of international finance.
There’s international precedent for such a move: Prime Minister Margaret Thatcher ordered Beijing in 1987 to make good on the bonds owned by Brits or lose access to the British capital markets. Then-Chinese President Li Xiannian’s government obliged, reaching a settlement of 23.5 million British pounds.
By paying some bondholders and not others, Beijing is technically in selective default, according to the ratings of bond-risk firms Moody’s, Standard & Poors and Fitch. Until China pays, it cannot sell debt on the international market, Bianco said.
Read the rest at: China owes US