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  • 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 Americanswho don't have crippling  student loan debtare looking for new ways  

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

  • is...basically zero. But don't worrybecause 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 meanwhat 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. governmentbecause  they were then an ally in the warallowed  

  • 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 meanthese bonds were sold around the world,  

  • the French, the Belgians, all over the placeThey were advertised in the New York Times,  

  • sold through Wall Street firms in New YorkAmerican 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 defaultedthe 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 IIwhich was in the 1940s, Great Britain borrowed  

  • back then $21 billion from AmericaIt 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 suppliesPPE 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. Sobasically 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 Chinathe 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 Frenchthe 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 holdersIs 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  

  • hereover 20,000 families in 46 statesand  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 debtwhat'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 Trumpbut 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 interestnot 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 partyUnfortunately 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