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johnd83

(593 posts)
Thu May 24, 2012, 11:31 PM May 2012

Wait... China owes us $1 trillion? Is this article real?


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.

More than 20,000 American investors own this debt. The U.S. government may also own Chinese war debt, unpaid since World War II.

The story begins 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 its war against Japan.

The government issued these bonds into 1940, and the U.S. government further provided a $500 million credit to China in March 1942. China doesn’t appear to have repaid this debt either, according to State Department records.

The new Communist government in 1949 refused to pay any of these claims. 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. And it is another thing for individual citizens to press their claims. Some U.S. investors tried to sue the Chinese government in the 1980s and 1990s, but the Foreign Sovereign Immunities Act makes it hard because the law generally says U.S. courts do not have jurisdiction.

<snip>


The rest is at the link:
http://savannahnow.com/opinion/2012-05-21/analysis-chinas-secret-it-owes-americans-nearly-1-trillion#.T778QsXu5ZQ

In truth these time scales are similar to the US debt to China will be in the long run. So the question becomes: Is this just an internet rumor, or is this true? If so, the obligations of debt don't seem to be that consistent.
4 replies = new reply since forum marked as read
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Wait... China owes us $1 trillion? Is this article real? (Original Post) johnd83 May 2012 OP
Can you tie the current U.S. debt to the Chinese government owning these bond exboyfil May 2012 #1
I honestly have no idea johnd83 May 2012 #2
Yeah, but just think what we must owe cthulu2016 May 2012 #3
I know at least part of this is true. China, along with every other non-Axis nation except Egalitarian Thug May 2012 #4

exboyfil

(17,857 posts)
1. Can you tie the current U.S. debt to the Chinese government owning these bond
Fri May 25, 2012, 12:53 AM
May 2012

If so would it be considered a default in the market as a whole to write down those bonds against the money the Chinese owe us? This could be different than a general default. Of course since U.S. treasuries are freely traded and the only ones that are specially designated to a particular owner are those held in Trust Funds like Social Security. If you plan to do this, then prepared to go to pay as you go.

johnd83

(593 posts)
2. I honestly have no idea
Fri May 25, 2012, 02:18 PM
May 2012

I am not an economist or lawyer. I found the article and was a little shocked at first, but given the Chinese economic disaster middle of the 1900s it isn't that surprising. What is really amazing is not only did we give the Chinese huge amounts of money in trade, we also gave away nearly a trillion dollars before that. How much have we subsidized them over the years, and why are we still?

cthulu2016

(10,960 posts)
3. Yeah, but just think what we must owe
Fri May 25, 2012, 02:24 PM
May 2012

to the people from Asia who came here across the Bering Strait and became the American Indians.

I think the practical statute of limitations on pre-communist Chinese debt has probably run out.

Just think what Cuba "owes" to the Cubans in Miami. (God knows it is all they ever think about!)

 

Egalitarian Thug

(12,448 posts)
4. I know at least part of this is true. China, along with every other non-Axis nation except
Fri May 25, 2012, 02:30 PM
May 2012

Britain, owes us from World Wars I and II.

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