In 1913, a year after the last Manchu emperor left the throne, China issued bonds that were backed by revenues from government-owned salt mines. Now, a group of Americans is telling China it's time to pay up on those bonds they say are worth US$89 billion today.
"There's a clear obligation for China to pay under international law," says B. Riney Green, a Nashville, Tennessee, attorney who is representing the American Bondholders Foundation, a group of some 345 families from 24 states.
China, however, has long insisted it is not responsible for the debts incurred before Mao Tse-tung led the communists to power in 1949. Calls to the Chinese Embassy in Washington were not returned.
PHOTO: AP
The American group holds more than 18,000 Chinese government bonds issued between 1913 and 1942, the great majority from sales in 1913 of "gold loan" bonds payable in British pound sterling and three other European currencies.
Geri Santos of Apollo Beach, Florida, said she found the bond certificates in a black bag after her mother died.
"We didn't know what they were" until she read a newspaper article about others with the Chinese bonds, and she still does not know how much they are worth. ``But I think there's going to be a payoff.''
Foundation members were in Washington last week seeking to raise awareness of their issue. Getting the Bush administration to take on a new dispute with China could be difficult.
"We're very realistic about our expectations," Green said.
But the foundation president, Tennessee cattle rancher Jonna Bianco, said members are not without hope. In 1987, as part of its negotiations with Britain on the return of Hong Kong, China did agree to partially honor pre-1949 debts to British bondholders. Those debts included gold loan bonds.
Treasury Department figures show that as of January, China was the fourth-biggest foreign holder of US Treasury securities, with US$65.5 billion, and Bianco said it receives more than US$4 billion a year in interest from those investments.
One possibility would be to seize some of those interest payments to compensate the holders of defaulted bonds, although Green said: ``We're not trying to precipitate some kind of financial crisis with China. That would be a last resort.''
Bianco said that with China's recent accession to the WTO, Beijing must abide by international rules on business transactions. Her group plans to file a formal complaint with the WTO.
``Nobody's trying to be greedy,'' Bianco said. She said the claimants have agreed that, if they reach a settlement with China, they would donate 10 percent of the after-tax money to the US government and set aside an additional 30 percent for humanitarian and charitable organizations.
"The administration owes its citizens the obligation to at least discuss the issue," said US Representative Bart Gordon, a Tennessee Democrat.
Gordon wrote President George W. Bush in January saying that because bondholders cannot take China to court, they are dependent on executive-branch action for a fair resolution of their claims. He said he has not received a response. Bianco said the Chinese government generally has ignored her many inquiries. One letter from China asked if the US paid back its debts after gaining independence from Britain. She wrote back that it did.
Officials of the State Department and the Securities and Exchange Commission have suggested that the group go through the Foreign Bondholders Protective Council, a private, nonprofit organization created in the 1930s to help individual Americans collect on defaulted foreign government bonds.
John Petty, who was an assistant treasury secretary during the Johnson and Nixon administrations, now heads the council. He said it was active before World War II and then again in the 1970s and 1980s because of unpaid East European bonds, but has not done much in the last 15 years.
Petty said he is prepared to assist those holding the Chinese bonds but needs some indication the administration is interested. "Unless you have the administration supporting the resolution of the problem, any intermediary is basically pushing on a string, he said.
CALL FOR PEACE: Czech President Petr Pavel raised concerns about China’s military maneuvers in the Taiwan Strait and its ‘unfriendly action’ in the South China Sea The leaders of three diplomatic allies — Guatemala, Paraguay and Palau — on Tuesday voiced support for Taiwan’s inclusion in the UN on the first day of the UN General Debate in New York. In his address during the 78th UN General Assembly, Palauan President Surangel Whipps Jr urged the UN and all parties involved in cross-strait issues to exercise restraint and seek a peaceful resolution. “The well-being and prosperity of nations and their economies are intrinsically linked to global peace and stability,” he said. He also thanked partner nations such as Taiwan, Australia, Japan and the US for providing assistance
CROSS-STRAIT CONCERNS: At the same US Congress hearing, Mira Resnick said a US government shutdown could affect weapons sales and licenses to allies such as Taiwan A Chinese blockade of Taiwan would be a “monster risk” for Beijing and likely to fail, while a military invasion would be extremely difficult, senior Pentagon officials told the US Congress on Tuesday. Growing worries of a conflict come as China has ramped up military pressure on Taiwan, holding large-scale war games simulating a blockade on the nation, while conducting near-daily warplane incursions and sending Chinese vessels around its waters. US Assistant Secretary of Defense for Indo-Pacific Security Affairs Ely Ratner said a blockade would be “a monster risk for the PRC [People’s Republic of China].” “It would likely not succeed, and it
AMPHIBIOUS EXERCISES: The defense ministry said that it had detected 24 Chinese PLA Air Force planes entering Taiwan’s air defense zone over the previous 24 hours Chinese movements around Taiwan were “abnormal,” Minister of National Defense Chiu Kuo-cheng (邱國正) said yesterday, flagging recent amphibious exercises in addition to drills Taipei has observed in China’s Fujian Province. Taiwan has reported a rise in Chinese military activity over the past week as dozens of fighters, drones, bombers and other aircraft, as well as warships, have operated around the nation. “Our initial analysis is that they are doing joint drills in September, including land, sea, air and amphibious,” Chiu told reporters at the legislature in Taipei. The “recent enemy situation is quite abnormal,” he said. The comments followed a statement from the
IN MOURNING: Tsai visited the site and spoke with family members of those killed, while all the major presidential candidates said they would temporarily halt campaigning A fire and subsequent explosions at a golf ball factory at Pingtung Technology Industrial Park (屏東科技產業園區) killed at least seven people, including four firefighters, and injured 98, while three were still missing, authorities said yesterday. The blaze at Launch Technologies Co’s (明揚國際) plant on Jingjian Road raged for more than 12 hours after it started at about 5pm on Friday, officials said. The Pingtung County Fire Bureau early yesterday used large excavators to search for missing people, while family members waited at the scene. Pingtung County Fire Bureau Director Hsu Mei-hsueh (許美雪) said the bureau received a call about the fire at 5:31pm
RSS