Trump has said China needs to pay for the coronavirus.
“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
their families as a result of the Chinese plague that we have seen bestowed upon this country.
So, the American bond holders under this proposal themselves would maybe only get
a nickel back on every dollar that they were originally owed but overall you're
saying that American taxpayers would save in addition to that because it
would reduce the amount that the U.S. has to pay back in U.S. treasury debt.
That is correct.
So, I think one of the interesting things here that you point out is that the law
that gives the U.S. government the tools to do this is already in place but it's
not really a question of the law at this point it's a question of political willpower, right?
That is correct.
And you have met with Trump, but so far in four years the
Trump administration has not actually done this.
Well, President Trump sent it to Secretary Mnuchin and that's the problem. He doesn't want to do
anything to rock the boat with the Chinese and so he keeps pushing the issue off. President Trump
would like to see this done and is committed to seeing this done and getting it resolved.
And it keeps being sent to Secretary Mnuchin who pushes it off and does not want to do
anything to rock the boat with China, that's evident. I mean, he is Mr. China. He's making
decisions that is in China's best interest, not in the interest of the American people.
So if Joe Biden becomes the next president and I recognize that's by no means certain
because obviously this is 2020 and you never know but if Joe Biden does become
president how do you think he and his treasury secretary possibly Janet Yellen would handle this?
I don't think they would. I mean, we are talking Beijing Biden here. So, I don't see any support
whatsoever coming from the democratic party. Unfortunately prior to President Trump coming
into office there's been multiple resolutions out of the House and the Senate on this issue
bi-partisan. It was always a bi-partisan issue until President Trump was elected president.
And now have you heard one Democrat condemn China for their handling of the COVID-19? Have you heard
one Democrat condemn China for their spying in our country through their Confucius Institutes?
Have you had one Democrat condemn China for anything whatsoever? You will not hear it because
they're working in collusion with the Chinese communist party to take down President Trump
to turn our country into a socialistic communistic country and turn it upside down and destroy the
American freedoms that we have. So to get justice under a Beijing Biden administration? I think not.
And I understand your criticism of the Democrats. I would like to point out that a
number of democratic Senators and Congresspeople have supported the Hong Kong Human Rights Act
and the Uighur Freedom Act. I forget the actual name. Nancy Pelosi has been outspoken about the
Tiananmen Square massacre. And some of the stuff that we've seen is bipartisan support for Hong
Kong and the Uyghurs. Now you're right that you haven't seen bipartisan support over the COVID-19.
I agree with you. They have spoke out in that regard but what actions did they actually take
to punish China, to go after China, to hold China accountable? So all of those things
while I think it's great that they spoke out and condemned it but again political rhetoric.
We need action, action, action and that is not what we are seeing.
Well, I think there's maybe some good news here because the Hong Kong Freedom and Democracy Act
did give the president essentially the tools to sanction specific individuals for their abuses in
Hong Kong. And so, you had bipartisan legislation and then you had the Trump administration actually
activate it so to speak and that gives me hope that maybe if this...
But tell me if sanctioning those people and sanctioning those handful of people, please
tell me how that affects the rest of Hong Kong and their citizenry and their freedoms or the Uighurs,
It does not. Tell me how that puts food on the table to the American people who have lost their
jobs because of the Chinese communist party and COVID-19. So the same with the travel ban.
While I think the tools that they're using and the actions that have been taken thus far have been
so minuscule in the grand scheme of things that it makes it appear that they're doing
something but to what benefit did that help the Uighurs? To what benefit did that help the freedom
of the Hong Kong people? To what benefit did blocking travel or sanctioning a handful
of Chinese communist party leadership, what benefit was that to the
millions of American people that have lost their jobs or the hundreds of thousands that have died
as a result of COVID-19 and the Chinese communist party plague?
Well, you're absolutely right. And the benefit to those policies is really that it disincentivizes
Chinese officials from committing further abuses. I mean, whether it's effective or not I think it's
hard to say so far. But what it does show is that there is some ability of Congress to come together
from both sides of the aisle and take some action on China. And the action that you're proposing
needs to happen through the American Bondholders Foundation is something that would really require,
there's already the law but it still requires probably more bipartisan political willpower.
Actually it only takes a national security presidential memorandum, not even an executive
order. It's a national security presidential memorandum from President Trump to his secretary
of treasury instructing him to follow the process legalities that we just mentioned and complete
this transaction in holding China accountable. So it doesn't require congressional involvement
or approval, the laws are already in place. It actually takes the backbone of President Donald
J. Trump in actually holding China accountable to the American people, to the bond holders, to the
citizens of the U.S. and actually holding China accountable. So an NSPM is basically all it takes.
So given that even under the Trump administration Secretary Mnuchin has not done this and also given
that the next president might be Joe Biden what advice would you have for the American
people who are watching this show, something that they can do to possibly push this along?
I recommend they contact the White House and urge President Donald J.
Trump to sign the National Security Presidential Memorandum and actually hold China accountable
to not only pay the bond holders but to do the debt offsets and utilize those funds
as an economic stimulus across America to help those that are struggling as a result
of the Chinese communist party plague bestowed upon the American people.
This is money that China owes that they haven't paid. So collect that debt,
let it benefit the American people and the bond holders and actually hold China accountable.
Well, I like your advice to have viewers write to the White House and I think it's a very
clever solution to have the U.S. Treasury pay China back for U.S. bonds with China's
own debt that they refuse to pay back. So thank you very much for joining me Jonna.
Thank you so much. I appreciate it.
And thank you for watching.
Tell us what you think in the comments below—and
let us know if you plan to write to the White House like she suggested.
Once again, I’m Chris Chappell. See you next time.