Former deputy national security advisor K.T. McFarland says the time for the U.S. to stand up to China is now or never and that President Trump understands the country must be dealt with from a position of strength.
Sen. Martha McSally, R-Ariz., introduced a resolution calling on China to repay U.S. bondholders more than $1.6 trillion of sovereign debt, including interest, that pre-dates the country’s Communist government.
Continue Reading Below
The measure will be co-sponsored by Sen. Marsha Blackburn, R.-Tenn, and a House measure led by Rep. Mark Green, R-Tenn. is forthcoming. Resolutions lack the force of law held by a bill, though they reflect the will of lawmakers.
“It is the sense of Congress that the President should do everything in his power to achieve resolution and repayment of the defaulted sovereign debt of the People’s Republic of China held by 20,000 families in the United States who are represented by the American Bondholders Foundation,” the resolution said.
$1.6T IN CENTURY-OLD CHINESE BONDS OFFER TRUMP UNIQUE LEVERAGE AGAINST BEIJING
The bonds, which are backed by gold, were issued by the Republic of China as far back as 1912. The government’s leaders fled to Taiwan following the end of Chairman Mao Zedong’s revolution in 1949. Beijing maintains Taiwan is part of China, and under international law, successor governments are responsible for the debts of their predecessors.
British Prime Minister Margaret Thatcher in 1987 ordered Beijing to pay Brits for their holdings or lose access to British capital markets, enticing then-Chinese President Li Xiannian’s government to reach 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, and cannot access the international debt market until it pays the remaining holders.
CHINA WIELDS CORONAVIRUS TO NATIONALIZE AMERICAN-OWNED CARMAKER
“We are thrilled,” said American Bondholder President Jonna Bianco, who has power of attorney for 95% of the thousands of U.S. bondholders. “We are pleased that our Senate leadership — and we’ve got one coming out of the House as well — are expressing their support in holding China accountable, consistent with America’s message to the president. Hold China accountable.”
This story is developing. Check back for updates.
