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.
A Chinese freighter that allegedly snapped an undersea cable linking Taiwan proper to Penghu County is suspected of being owned by a Chinese state-run company and had docked at the ports of Kaohsiung and Keelung for three months using different names. On Tuesday last week, the Togo-flagged freighter Hong Tai 58 (宏泰58號) and its Chinese crew were detained after the Taipei-Penghu No. 3 submarine cable was severed. When the Coast Guard Administration (CGA) first attempted to detain the ship on grounds of possible sabotage, its crew said the ship’s name was Hong Tai 168, although the Automatic Identification System (AIS)
An Akizuki-class destroyer last month made the first-ever solo transit of a Japan Maritime Self-Defense Force ship through the Taiwan Strait, Japanese government officials with knowledge of the matter said yesterday. The JS Akizuki carried out a north-to-south transit through the Taiwan Strait on Feb. 5 as it sailed to the South China Sea to participate in a joint exercise with US, Australian and Philippine forces that day. The Japanese destroyer JS Sazanami in September last year made the Japan Maritime Self-Defense Force’s first-ever transit through the Taiwan Strait, but it was joined by vessels from New Zealand and Australia,
SECURITY: The purpose for giving Hong Kong and Macau residents more lenient paths to permanent residency no longer applies due to China’s policies, a source said The government is considering removing an optional path to citizenship for residents from Hong Kong and Macau, and lengthening the terms for permanent residence eligibility, a source said yesterday. In a bid to prevent the Chinese Communist Party (CCP) from infiltrating Taiwan through immigration from Hong Kong and Macau, the government could amend immigration laws for residents of the territories who currently receive preferential treatment, an official familiar with the matter speaking on condition of anonymity said. The move was part of “national security-related legislative reform,” they added. Under the amendments, arrivals from the Chinese territories would have to reside in Taiwan for
CRITICAL MOVE: TSMC’s plan to invest another US$100 billion in US chipmaking would boost Taiwan’s competitive edge in the global market, the premier said The government would ensure that the most advanced chipmaking technology stays in Taiwan while assisting Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in investing overseas, the Presidential Office said yesterday. The statement follows a joint announcement by the world’s largest contract chipmaker and US President Donald Trump on Monday that TSMC would invest an additional US$100 billion over the next four years to expand its semiconductor manufacturing operations in the US, which would include construction of three new chip fabrication plants, two advanced packaging facilities, and a research and development center. The government knew about the deal in advance and would assist, Presidential
RSS