US - China relations

Enhance Naval Deterrence, Near and Far​

China Maritime Report No. 37: Re-Engaging With the World: China's Military Diplomacy in 2023​

It’s practically an international article of faith: Countries may not default on their sovereign debt. Yet China has done just that on $1 trillion it owes to U.S. bondholders. Is there nothing we can do about it?

Finding members of Congress willing to talk tough isn’t hard. Many resolutions and joint letters over decades have called for China to honor its debt to U.S. citizens. But too many members, their election coffers lined by Wall Street and other financial and business interests heavily exposed to China, leave it at that.

That makes the action of Sen. J.D. Vance (R-Ohio) all the more noteworthy. He recently introduced a bill to address the People’s Republic of China’s selective default on American bondholders of Chinese sovereign debt.
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Some historical context is needed here. Before the People’s Republic of China was established in 1949, the Republic of China issued a large volume of long-term sovereign gold-denominated bonds, secured by Chinese tax revenues, for the construction of infrastructure and financing of governmental activities. China’s imperial government had done the same before the Republic of China was formed in 1912.

Following its defeat in the Chinese Civil War, the Republic of China’s government fled mainland China to Taiwan in 1949. The People’s Republic of China was eventually recognized internationally as its successor government. Under well-established international law, the “successor government” doctrine holds that, as the current government of China, the People’s Republic is responsible for repayment of the bonds issued by both predecessor governments, the Republic of China and previous imperial governments.

There is precedent for the PRC paying back this defaulted sovereign debt. British Prime Minister Margaret Thatcher’s tough stance led to a British settlement agreement on Chinese sovereign bonds owed to British bondholders, established in the Foreign Compensation Order of 1987.

As a result, the PRC Fund was established, and British bondholders of this debt were paid their due. Now our government should demand a settlement as well.

No other country has been permitted to continuously get away with defaulting on its sovereign debt while maintaining access to U.S. capital markets. ...

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To restrict the Chinese Government from accessing United States capital markets and exchanges if it fails to comply with international laws relating to finance, trade, and commerce.
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(b) In general.—If the Secretary of the Treasury, in consultation with the Committee on Foreign Investment in the United States, determines that the Government of the People's Republic of China is not in compliance with applicable laws relating to finance, trade, and commerce, as specified in subsection (c) and including the successor government doctrine with respect to sovereign debt, the Secretary shall prohibit any applicable United States entity, including capital markets, bond markets, and exchanges, from accepting any new investment, or effecting any transaction for others relating to a new investment, from such government or any commercial entities under the control of such government.
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UPDATED: Chinese Spy Ships Stalk U.S., Philippine and French Warships in South China Sea​