IV 

110TH CONGRESS 

1ST SESSION H. CON. RES. 160 

Regarding the endorsement of U.S. citizens’ claims for payment by Chinese 

Government of defaulted Chinese bonds. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 24, 2007 

Mr. LINCOLN DAVIS of Tennessee submitted the following concurrent 

resolution; which was referred to the Committee on Financial Services 

CONCURRENT RESOLUTION 

Regarding the endorsement of U.S. citizens’ claims for 

payment by Chinese Government of defaulted Chinese bonds. 

Whereas China issued full faith and credit long term (e.g. 47 

years) sovereign government bonds from 1913 through 

1938, with the following language printed on the face of 

each of these bonds and the original loan agreement, 

‘‘These obligations are intended to be binding upon the 

Government of China and any successor government’’, 

and were sold to investors based upon these representations; 

Whereas the established conventions of international law with 

respect to the obligation of a successor government to 

honor the full faith and credit sovereign obligations of a 

predecessor government is a fundamental tenet of international trade and commerce; 

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Whereas on March 31, 1921, the New York Times advertised 

the sale and purchase of these bonds on behalf of Cowen 

& Company to United States citizens; 

Whereas on April 20, 1921, the New York Times published 

a display ad advertising these bonds for sale to United 

States citizens on behalf of Pynchon & Company, a registered member of the New York Stock Exchange; 

Whereas on April 26, 1921, the New York Times advertised 

the sale and purchase of these bonds to United States 

citizens on behalf of Bull & Eldredge, a registered member of the New York Stock Exchange; 

Whereas on May 22, 1921, the New York Times published 

an advertisement for the sale and purchase of these 

bonds to United States citizens for Ernest Smith & Company-Dealers in Foreign Government Bonds; 

Whereas on October 18, 1924, the New York Times published the ‘‘Bid and Asked quotes’’, for these bonds; 

Whereas on November 11, 1932, the New York Times published the price and yield of these bonds for the previous 

days trading; 

Whereas China defaulted on all of its public debt in 1939; 

Whereas the People’s Republic of China (in this resolution referred to as ‘‘PRC’’) became the official government of 

China, assuming its assets as well as its liabilities in 

1949; 

Whereas in 1955, the People’s Republic of China issued an 

official communique from the Minister of Foreign Affairs 

and the Minister of Finance addressed to all Chinese embassies around the world advising that the PRC had not 

the ability to pay this debt burden (U.S. translation from 

Mandarin Chinese); 

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Whereas the People’s Republic of China replaced the Republic of China in the United Nations as the officially recognized government of China on November 23, 1971, and 

was subsequently recognized as the government of all 

China; 

Whereas in 1979, the Chinese Government negotiated a Treaty with the United States providing compensation to U.S. 

Nationals who suffered a taking of property by the government of the PRC. Because no positive action was 

taken as of the date of the Treaty by the government of 

the PRC, with respect to the debt, the bonds were excluded from the scope of the Treaty, (Title V of the 

International Claims Settlement Act does not provide any 

statutory authority for the Foreign Claims Settlement 

Commission to address takings prior to 1949, therefore, 

lacking authority to negotiate the settlement of the defaulted bonds of the PRC); 

Whereas in 1983, the People’s Republic of China, Minister of 

Foreign Affairs issued an official Aide Memoire to the 

United States Department of State asserting that the 

PRC should have no obligation to pay the debts and advising that they would hold the U.S. Department of State 

and the United States Government responsible should the 

PRC be required to honor this debt and demanded that 

the PRC be protected from suit in United States Courts 

on this issue citing a mandate of Sovereign Immunity 

Protection for the PRC, which has subsequently continued to be upheld in the United States court system; 

Whereas the government of the People’s Republic of China 

concluded a discriminatory settlement of these bonds with 

respect to British bondholders in 1987, and which exmstockstill on PROD1PC66 with BILLS

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cludes United States bondholders from participation. 

This is known as the 1987 China-Brit Treaty; 

Whereas on May 24, 2000, the United States granted Permanent Normal Trade Status to the People’s Republic of 

China; 

Whereas on December 22, 2000, notices from the law firm 

of Stites & Harbison were submitted to the United States 

Securities and Exchange Commission (in this resolution 

referred to as ‘‘SEC’’), the White House, United States 

Department of State and the Federal Trade Commission 

seeking their assistance in the collection efforts of China’s defaulted sovereign debt; 

Whereas on January 29, 2001, U.S. Senator Bill Frist sent 

written notice to the SEC expressing support of this collection effort and requesting the SEC to actively assist 

on this issue; 

Whereas on June 13, 2001, the SEC, working jointly and collectively with the State Department, the National Security Council and the Senior Associate Counsel to the 

President recommended seeking the assistance of the 

Foreign Bondholders Protective Council (in this resolution referred to as ‘‘FBPC’’) to assist in the collection efforts of this claim. The FBPC was enacted under Presidential Executive Order in 1933 by President Franklin 

D. Roosevelt to assist U.S. citizens in collecting on foreign defaulted debt. The FBPC with the U.S. Government’s endorsement has successfully settled over 40 bond 

settlements for U.S. citizens from defaulted bonds issued 

by foreign governments; 

Whereas on August 16, 2001, the American Bondholders 

Foundation, LLC (in this resolution referred to as 

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‘‘ABF’’) was created to represent the consolidated efforts 

of bondholders holding defaulted sovereign obligations of 

the People’s Republic of China; 

Whereas on February 5, 2002, the ABF through its legal 

representatives Stites & Harbison, PLLC made formal 

written demands to the PRC requesting fair settlement 

of these claims. Several subsequent notices have been 

sent since that time, all of which the PRC has continued 

to ignore and evade the issue; 

Whereas on May 17, 2002, the United States Congress, initiated by Congressman Bart Gordon, sent written notice to 

President George W. Bush supporting the efforts of the 

ABF to receive a fair settlement from the PRC and requesting action by the Administration to hold the Chinese 

Government accountable to American citizens for a fair 

resolution of their claims as holders of defaulted Chinese 

Government bonds. This letter was endorsed by over 50 

members of the United States House of Representatives; 

Whereas on September 25, 2002, Congressman Walter Jones 

submitted H. Con. Res. 485 requesting the United States 

Government to take appropriate action to urge the PRC 

to provide for a fair resolution of the claims of United 

States citizens holding defaulted Chinese Government 

bonds. Congressman Walter Jones and several other 

Members of Congress held a press conference outside the 

Cannon House Office Building to announce the resolution. This resolution was assigned to the Committee on 

Financial Services and was endorsed and supported by 

Chairman Michael Oxley, however, was unable to be entered onto the calendar for hearings prior to the ending 

of the 107th Congress; 

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Whereas on February 27, 2003, Congressman Walter Jones 

re-submitted the previous Resolution H. Con. Res. 485, 

which then became H. Con. Res. 60. H. Con. Res. 60 

was referred to the Committee on International Relations, Chairman Henry Hyde; 

Whereas on June 17, 2003, Congressman Walter Jones 

issued a letter stating that under International Law, 

China is clearly obligated to pay American citizens. In 

Congressman Jones’ letter, he encouraged the ABF to 

pursue other, non-legislative avenues of seeking redress 

and compensation for the bondholders. Mr. Jones wrote, 

‘‘A possible tender of the valid full faith and credit obligations of the Chinese Government, which the People’s 

Republic of China is obligated to accept under International Law as a means of cancellation of Iraq’s existing 

external sovereign debt to the PRC, would reinforce accepted conventions of international trade and commerce 

as well as free Iraq from an otherwise oppressive debt 

burden. It would enable Iraq to conserve its economic resources for economic development and nation building, 

while possibly resulting in a measure of just compensation for U.S. bondholders. This avenue should be fully explored.’’; 

Whereas on October 21, 2003, the Committee on International Relations, United States Congress, House of 

Representatives, Chairman Henry Hyde held formal 

hearings in the Rayburn House Office Building in Washington, DC entitled: Reassessing the U.S. Economic Relationship with China. Mrs. Jonna Bianco, President of 

the American Bondholders Foundation, was requested by 

the International Relations Committee to testify before 

the Committee. Ms. Bianco spoke about the activities of 

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the American Bondholders Foundation (ABF) representing the consolidated claims of U.S. citizens who are 

holders of sovereign bonds issued by the government of 

China and on which that government has defaulted and 

continues to evade payment. Ms. Bianco also presented 

the International Offset Structure enabling countries that 

have outstanding debts owed to the People’s Republic of 

China to acquire these bonds discounted from the ABF 

and then utilize the bonds under full contractual value to 

extinguish such debts owed to the PRC; 

Whereas on October 30, 2003, Senator Richard Shelby issued 

a letter endorsing the ABF’s International Offset Structure. Other Members of the House and Senate have 

issued letters endorsing the same, including the Chairman of the International Relations Committee, Chairman 

Henry Hyde; 

Whereas in September 2005, the World Bank hosted a special luncheon and invited heads of banks and finance 

ministers to meet with the ABF to begin communications 

working towards reducing foreign governments’ debts 

owed to the PRC through the International Offset Structure presented by the ABF; 

Whereas from June 22–October 31, 2006, Members of the 

United States Congress issued multiple letters endorsing 

the ABF’s Offset Structures and supported any entity, 

whether government or private, to acquire these defaulted 

bonds discounted from the ABF then utilizing them 

under full contractual value to extinguish their debts 

owed to the PRC; 

Whereas in 2006, the People’s Republic of China officially 

continued to assert its position mandating sovereign immunity protections as evidenced in the case of Marvin 

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Morris v. the People’s Republic of China in the United 

States District Court for the Southern District of New 

York, upon which the courts granted; 

Whereas in May 2007, it is estimated that American companies are losing 250 to 300 billion dollars in capital due 

to China’s intellectual property thefts; 

Whereas participation in the globalized economy requires nations affirm their international trade and treaty obligations through concrete actions, such as those associated 

with the World Trade Organization (in this resolution referred to as ‘‘WTO’’). This was not only the expectation 

but the clear pre-condition of Congressional support of 

the People’s Republic of China’s admission to the WTO. 

Continuing to monitor China’s actions to adhere to international trade and investment laws and practices is a 

natural oversight responsibility of Congress. The PRC’s 

recognition and settlement of defaulted obligations is a 

litmus test of their overall good economic intentions. The 

initiative of the ABF in taking on the settlement of the 

defaulted bonds, pursued in a manner consistent with 

recognized international standards, is helping to reinforce 

the multilateral system where nations trade and invest 

globally. Without effective enforcement of accepted norms 

of international trade and commerce, the global financial 

system is placed in jeopardy; 

Whereas the PRC continues to have open and unfettered access to all U.S. capital markets while at the same time 

continuing its practices of exclusionary settlement, discriminatory payments, selective default, and rejection of 

the successor government doctrine of settled international 

law; and 

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Whereas to preserve the integrity of public debt contracts and 

enhance financial markets discipline and transparency for 

all participants, and consistent with the terms and conditions established with the People’s Republic of China’s 

entry into the World Trade Organization, specifically the 

PRC’s acknowledgment and acceptance to be a financially responsible trading partner and to be economically 

responsible; and with substantial evidence confirming 

that the PRC has not complied with the terms and conditions with accepted conventions of international law including the terms and conditions of the aforementioned: 

Now, therefore, be it 

1 Resolved by the House of Representatives (the Senate 

2 concurring), That Congress hereby recommends that the 

3 People’s Republic of China be denied access to all U.S. 

4 capital markets until such time as the PRC fully complies 

5 with the terms and conditions of the WTO Agreement and 

6 fully honors repayment of its outstanding defaulted public 

7 debts owed to United States citizens consistent with the 

8 efforts of the American Bondholders Foundation. 

Æ 

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