Among the many reasons for America’s claim against the Chinese Communist Party (CCP), which it considers its greatest threat, is that China owes more than $2 trillion for bonds issued more than a hundred years ago, which it stopped paying in 1938.

This type of debt does not expire over time, nor with a change in the systems of government or ideologies. It has been respected by all nations that use the sale of sovereign bonds to obtain financing, as National Pulse reports on Dec. 29.

Although the Republic of China acquired the debt before the CCP took power, the law of state succession applies according to which a new government is the beneficiary of the previous government’s assets and resources.

Likewise, they are the recipients of the previous government’s debt obligations, which makes them inalienable.

The CCP’s refusal to pay affects the 20,000 families who now hold these securities and are associated through the American Bondholder’s Foundation, presided over by Jonna Bianco.

An alternative solution to the complex collection process would be to exchange this debt for the account that the United States government has with the CCP, and for which it pays the CCP $72 million a day in interest. 

As National Pulse points out, this solution is within reach of President Trump, who can authorize all the defaulted Chinese sovereign bonds to be sold to the U.S. Treasury for pennies on the dollar.  The U.S. Treasury can then present these Chinese bonds as repayment toward U.S. Treasury holdings China owns: essentially a debt swap.

It should be remembered that in similar cases, the United Kingdom finished paying its debts from the Second World War in 1987, and so did Russia when it finished paying its obligations from the Soviet Union in 2006.

The case of the CCP’s debt has been considered by the legislators of the U.S. Senate and House of Representatives.

“We can no longer stand by and allow China to default on its obligations to our nation under international law,” said Rep. Mark Green in August. 

A few days earlier, Senator Martha McSally, supported by Senator Marsha Blackburn, had introduced a similar resolution in the Senate.

Writer Jonathan M. Reck concludes: “If China is seen as a primary existential threat, it is prudent that the United States should no longer remain China’s debtor, especially when a clear and actionable path toward eliminating these debts is readily available for the President to implement.”

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