GOP Sen. Martha McSally, R-Ariz has called for China to repay a $1.6T sovereign debt plus interest that dates back over a century, prior to the formation of the Chinese Communist Party.
The resolution has been co-sponsored by other GOP lawmakers, including Sen. Marsha Blackburn, R.-Tenn, as well as a house measure led by Rep. Mark Green, R-Tenn.
Originally, the $1.6T gold-backed bonds were issued by the Republic of China in 1912. As Mao Zedong’s revolution swept the country, the Republic of China’s leadership fled to Taiwan, effectively putting any form of repayment to bondholders in stasis.
Since Beijing continues to insist that Taiwan is part of China, international law dictates that the debt carries over to the successor government, thus putting the current regime on the hook.
This would not be the first time China has had to pay back bondholders, however. In 1987, British Prime Minister Margaret Thatcher demanded that Beijing pay back the U.K. for its holdings or China would be denied access to British capital.
