“China's going to pay a big price”

And there's one creative way

the US could make China pay.

Welcome to China Uncensored. I'm Chris Chappell.

A lot of Americans—who don't have crippling  student loan debt—are looking for new ways  

to invest their savings. The interest  rate on government bonds here in America  

is...basically zero. But don't worry,  because investment firms that I trust,  

like BlackRock, are encouraging us to  invest in Chinese government bonds.

We know China is a great  place to throw our money into,  

because they've been issuing government  bonds for more than a century.

But according to the American  Bondholders Foundation,  

there have been a few small problems in the  past for investors who've bought Chinese debt.  

Small problems, like not ever getting paid back.

Matt Gnaizda sat down with Jonna Bianco, President  

of the American Bondholders  Foundation, to learn more.

INTERVIEW

All right. Thanks for joining me Jonna.

Happy to be here. Thank you.

Now you're an expert on Chinese bonds which is  good because they're really hot right now. A  

few weeks ago the Chinese government raised  $6 billion in a huge international sale of  

their sovereign bonds. So my question is, how much  should I be investing in these new Chinese bonds?

Well look, when it comes to China  history has a tendency to repeat itself.  

I represent 20,000 U.S. citizens  holding defaulted Chinese sovereign debt  

that they defaulted on, refused to pay, although  paid Great Britain. So as we know, history does  

repeat itself. Your money gets tied up, they  default, you have nowhere to go to collect it  

with China other than your government. And we have  seen nothing but game playing in politics when it  

comes to China especially with Beijing Biden and  the Democrats. I mean, we've seen that with the  

election, we've seen it with our national  security, we've seen it with the continued  

ignoring of the most existential threat we've  ever seen facing this country which is China.

I mean, so you're suggesting  that maybe we shouldn't trust the  

Chinese communist party? I mean,  what have they ever lied about?

I think that the list would be shorter to say what  have they told the truth about. In all honesty,  

we cannot trust China. Look, we see President  Donald Trump speaking about it, we see  

DNI Ratcliffe, we see secretary Pompeo. Everybody  is saying China is the most existential threat  

facing this country and yet it continues to fall  on deaf ears with our politicians on both sides of  

the aisle. They know of this threat. I mean  gosh look at this, it took 10 years for the  

Senate under McConnell's leadership to get a bill  to the Senate floor and a vote just to make China  

and their state-owned enterprises comply with the  very same rules and regulations that every other  

company trading on Wall Street from around the  world has to comply with. There's no disclosure,  

there's no information available to the  investor. China hides behind state secrets.

And so, it took 10 years just to get that bill  to the floor and in that vote they agreed, "Let's  

give them three years to come into compliance with  SEC rules and regulations to audit their books.  

So investors know where their money's actually  going." Well, I can tell you where it's going,  

it's going for nefarious reasons as we've seen  with the military buildup in the South China Sea,  

their technology information  stealing. The list is a mile long.  

And so, investing in China is very, very dangerous  and there is no control. We've seen the same thing  

in the house. I've seen nothing but political  rhetoric pandering to Wall Street and the big  

Chinese contributions and donors that fill  their pockets and yet nothing is ever done,  

at the peril of the citizens of the  United States and those around the world.

Well, and this ties back into what you're  working on because you're the president of  

the American Bondholders Foundation. And  back in 1912, so more than a hundred years  

ago after the fall of the Qing Dynasty, the  Republic of China government issued a huge  

tranche of debt to build their new republic. I  think it was about 25 million pounds of debt,  

British pounds. So that's like four billion  U.S. dollars in today's money, right?

Right. And they did that in '12, '13, '14, all the  way up through 1938 and then they went into big  

default and then the U.S. government—because  they were then an ally in the war—allowed  

them to borrow U.S. taxpayers' dollars to which  they still never paid back. And then we have the  

communist regime, the Chinese communist party  that came in and took over. And other than  

being held to account by Margaret Thatcher  in 1987 to pay back this debt, these bonds,  

to their citizens no one else has told China you  have to pay your debt, you have to pay your bonds.

So let's talk about these bonds  specifically. So the debt that  

they'd been issuing in the first half of  the 20th century: Who bought these bonds?

Well, banks bought these bonds. I mean,  these bonds were sold around the world,  

the French, the Belgians, all over the place.  They were advertised in the New York Times,  

sold through Wall Street firms in New York,  American citizens, a lot of military people  

because it was promoted to military people  to help support our then-ally in the war to  

purchase these bonds. And then China defaulted,  the communist regime came in and they now refuse  

to pay. Keep in mind governments issue long-term  debt 30, 40, 50, 60 year long bonds. In fact,  

China is issuing 100-year bonds in Europe as we  speak. And look, sovereign debt does not expire.

It's important to note that during World War II,  which was in the 1940s, Great Britain borrowed  

back then $21 billion from America.  It was only December 31st of 2006  

that they made their last and final payment paying  off that debt of sovereign debt owed to America  

which was from tax payers dollars. So  again, sovereign debt does not expire,  

government debt does not expire. It would  be no different than somebody who bought  

a 30 year treasury bond today 20 years from now  under a different administration says, "Oh gosh,  

that was 20 years ago, 30 years ago, that's  old. We shouldn't have to pay that now. Move on,  

just move along and don't get your  money." And that's basically what we see.

And it's a big bully dealing with China  and their political allies on Wall Street  

and corporate America who sold out middle-class to  profit themselves and put Americans out of work,  

out of manufacturing. The middle to low  income individual was just out of a job  

and it all went to China. And we see the results  of that just like we saw during this pandemic of  

not being able to get pharmaceutical supplies,  PPE equipment, so on and so forth. And so,  

the only people that profited from that is your  senior executives in these Wall Street firms.  

And unfortunately, with all of the thousands of  state owned enterprises that China has trading on  

our markets that unwitting American citizens  through their retirements, 401ks, pensions  

are being invested in China and it's not going  to be too much longer as we've seen the massive  

amounts of default go on in businesses in China  that they're going to default again. And those  

people are going to lose their pensions, their  401ks, their retirement, and have nothing left.

That's a really good point but I want to talk  a bit about the continuity of these long-term  

bonds that were issued 100 years ago. I mean  look, I don't want to be held responsible  

for things I did 20 years ago but I understand  that for governments it's different. However,  

comparing that to what happened in China  to getting a new U.S. president maybe  

isn't the best analogy because in 1949  the People's Republic of China took over  

from the Republic of China and now the Republic  of China government that had issued those bonds  

is now basically what we call the government  of Taiwan. So why should the People's Republic  

of China have to pay the debt issued by the  previous government that occupied that region?

Because they occupy and control the infrastructure  that these funds were used to create. To this  

moment they're still collecting the salt  tax that was used to underwrite these bonds,  

it's called successor government doctrine. So,  basically the current government is responsible  

for the debts and obligations of the former  government. Look, and China mandates a One  

China Policy not recognizing Taiwan as we  very well know. And so, I'm quite confident  

that the Republic of China in fact they passed  it in their constitution under Article 63  

just not too many years ago that when they become  the real China again they're more than happy, and  

are recognized as such, they're more than happy  to pay their financial debts and obligations.

In the meantime, they're under the control under  a One China Policy of Beijing and the communist  

party and under law, international law, U.S.  law, successor government doctrine prevails.  

And there's precedent. Look, Margaret Thatcher  recognized this and in 1987 made it clear  

to the People's Republic of China,  the Chinese communist party,  

"You're not going to issue more bonds on  our soil taking more money from our citizens  

until you start paying the bonds in the defaulted  debt that you already owe." And so in fact,  

the Chinese communist party, the PRC, did in  fact pay Great Britain for the very same bonds  

that American citizens are holding, the French,  the Belgiums and many others around the world.

Well, so the Chinese communist party  recognized the validity of the debt  

and paid it back but only to the  British investors and not to the  

American investors or bond holders.  Is that what you're saying?

That is correct. And it's because no American  administration, no president has said to China,  

"You have to pay your debts to the American  people." I mean, we hear during election time  

on both sides of the aisle of course until this  recent one, "We have to hold China accountable.  

We're going to be tough on China." President  Trump ran in 2016 on holding China to account  

and in fact made it clear that we are where  we are with China not because that he blamed  

China but he blamed former administrations for  not being tough on China and making them play  

by the same rules that the rest of the world  played by especially when it comes to trade.

So until President Donald J. Trump came  around no previous administration would  

hold China accountable. They wouldn't make them  play by the same rules. Now, Donald Trump says  

he's going to make China pay, he's going to hold  them accountable. And on behalf of the American  

Bond Holders Foundation we do believe he's a  promises made promises kept president. I have  

met with him. He has assured me faithfully that he  would resolve this issue but the clock is ticking  

and Americans are suffering at the hands of the  Chinese communist party and their plague. And  

we're paying $72 million a day of our tax dollars  going to China for Chinese held U.S. Treasuries.  

Why can that money not go to the American people  that are suffering because of the Chinese plague?  

And so, we're now calling upon President Trump  to uphold your word, your promises that you have  

made. Let's keep those promises and let's actually  do something and be tough on China and hold them  

accountable versus just political rhetoric that  we see from all of these various politicians.

Right. So you guys actually have a very  specific proposal to essentially force the  

Chinese communist party to pay back that debt  to U.S. bond holders. What is that proposal?

Well, it's actually in the law. It's something  that Congress passed long ago. Basically at the  

president's request the treasury secretary can  bring in the bonds held by the American citizens  

here—over 20,000 families in 46 states—and  they can use those bonds to extinguish the debt  

that America owes to China so basically  you're basically swapping paper for paper.

Okay. So basically what you're  saying is that the U.S treasury  

buys the Chinese bonds from American bond  holders and then the U.S. Debt that the  

Chinese government holds. The U.S. treasury  doesn't pay China back in American dollars,  

instead we pay China back with its  own debt. Am I getting that right?

That is correct. That is correct. Which will save  hundreds of billions of dollars to the American  

people. Because I mean look, the American Bond  Holders Foundation and typical debt settlements  

to this capacity, this isn't new. There's been  47 previous bond settlements of defaulted debt in  

this country to the Foreign Bondholders Protective  Council which was established in 1934 under  

President Roosevelt and secretary of state Cordell  Hall. So what we propose is not anything new.  

It just needs to have the political willpower and  the backbone to stand against the communist regime  

and hold them accountable. This would be  actually debt settlement number 48. And so,  

typical settlements are done at pennies on  the dollar, however utilized at full value to  

extinguish debt under a debt offset owed to that  foreign entity. So this isn't anything uncommon,  

this isn't anything new, it's already in the  law. It just needs to be upheld and enforced.

What's the total amounts of  Chinese government debt from this  

20th century tranche of debt,  what's the total amount held by  

Americans and what's the total value that you  think could be gotten back by these bond holders?

Well right now, of course you have the accrued  interest and these are gold bonds so it's based  

on the current market value of gold. We're holding  nearly $2 trillion worth of these bonds based on  

how the courts have ruled on time value, loss of  money, et cetera, by the experts. And so, China  

is currently holding approximately 1.1 trillion  in U.S. treasuries. And so, which is why we're  

paying $72 million a day of taxpayer dollars that  are going to China. So if you took in these bonds  

and you paid out a small fraction of that,  a very, very, I'm talking literally pennies  

like under a nickel on the dollar kind of thing  to the American bond holders that hold these  

you could extinguish hundreds of billions of  dollars of debt to China that they use those  

funds to buy up America as we've seen and  also for nefarious reasons around the world.

So, it would be a huge benefit savings to the  American people. It would also help put China  

in check. It would hold them accountable. And in  fact, these very same funds could be used as a  

stimulus to the American people that have lost  their jobs, are losing their homes, can't feed