(1) APPROPRIATE
CONGRESSIONAL
COMMIT-
TEES.—The term ‘‘appropriate congressional com-
mittees’’ means the following: 
(A) The Committee on Armed Services, the 
Committee on Foreign Relations, the Com-
mittee on Finance, and the Committee on the 
Budget of the Senate. 
(B) The Committee on Armed Services, 
the Committee on Foreign Affairs, the Com-
mittee on Ways and Means, and the Committee 
on the Budget of the House of Representatives. 
(2) DEBT
INSTRUMENTS
OF
THE
UNITED 
STATES.—The term ‘‘debt instruments of the United 
States’’ means all bills, notes, and bonds issued or 
guaranteed by the United States or by an entity of 
the United States Government, including any Gov-
ernment-sponsored enterprise. 
SEC. 3. FINDINGS. 
Congress makes the following findings: 
(1) On March 16, 2006, the United States Sen-
ate debated and then narrowly passed legislation, H. 
J. Res. 47, to increase the statutory limit on the 
public debt of the United States. In a statement 
published in the Congressional Record, then-Senator 
Barack Obama opposed the legislation and stated, 
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‘‘The fact that we are here today to debate raising 
America’s debt limit is a sign of leadership failure. 
It is a sign that the U.S. Government can’t pay its 
own bills. It is a sign that we now depend on ongo-
ing financial assistance from foreign countries to fi-
nance our Government’s reckless fiscal policies.’’. 
Then-Senator Obama went on to say that ‘‘Increas-
ing America’s debt weakens us domestically and 
internationally. Leadership means that ‘the buck 
stops here’. Instead, Washington is shifting the bur-
den of bad choices today onto the backs of our chil-
dren and grandchildren. America has a debt problem 
and a failure of leadership. Americans deserve bet-
ter.’’. 
(2) On February 25, 2010, United States Sec-
retary of State, Hillary Rodham Clinton, urged 
members of Congress to address the Federal budget 
deficit: ‘‘We have to address this deficit and the debt 
of the United States as a matter of national secu-
rity, not only as a matter of economics. I do not like 
to be in a position where the United States is a 
debtor nation to the extent that we are.’’. The Sec-
retary went on to say that reliance on foreign credi-
tors has hit the United States ‘‘ability to protect our 
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security, to manage difficult problems and to show 
the leadership that we deserve.’’. 
(3) On February 16, 2011, Admiral Mike 
Mullen, Chairman of the Joint Chiefs of Staff, testi-
fied before the Committee on Armed Services of the 
Senate: ‘‘Indeed, I believe that our debt is the great-
est threat to our national security. If we as a coun-
try do not address our fiscal imbalances in the near- 
term, our national power will erode, and the costs to 
our ability to maintain and sustain influence could 
be great.’’. 
(4) The Department of the Treasury borrows 
from the private economy by selling securities, in-
cluding Treasury bills, notes, and bonds, in order to 
finance the Federal budget deficit. This additional 
borrowing to finance the deficit adds to the Federal 
debt. 
(5) The Federal debt stands at more than 
$14,345,000,000,000. 
(6) According to a report issued by the Depart-
ment of the Treasury on May 16, 2011, entitled 
‘‘Major Foreign Holders of Treasury Securities’’, 
foreign holdings of United States Treasury securities 
stood at more than $3,175,000,000,000 at the end 
of March 2011. The People’s Republic of China was 
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the single largest holder with holdings of more than 
$1,144,000,000,000. 
(7) Despite efforts by the Department of the 
Treasury to identify the nationality of the ultimate 
holders of United States securities, including United 
States Treasury securities, data pertaining to for-
eign holders of these securities may still fail to re-
flect the true nationality of the foreign entities in-
volved. For example, another Department of the 
Treasury report, issued on February 28, 2011, enti-
tled ‘‘Preliminary Report on Foreign Holdings of 
U.S. Securities At End-June 2010’’, assigns 
$732,000,000,000 worth of United States securities 
to the Cayman Islands, a British overseas territory 
with a population of only 55,000 people. The Cay-
man Islands is not itself a large investor in United 
States securities; rather, it is a major international 
financial center and is routinely used as a place to 
invest funds from elsewhere. 
(8) On February 25, 2010, Simon Johnson, an 
economics professor at the Massachusetts Institute 
of Technology and a former chief economist for the 
International Monetary Fund, testified before the 
U.S.-China Economic and Security Review Commis-
sion that United States Treasury data understate 
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Chinese holdings of United States Government debt 
and ‘‘do not reveal the ultimate country of owner-
ship when debt instruments are held through an 
intermediary in another jurisdiction.’’. He stated 
that ‘‘a great deal’’ of the United Kingdom’s in-
crease in United States Treasury securities last year 
‘‘may be due to China placing offshore dollars in 
London-based banks’’, which are then used to pur-
chase United States Treasury securities. 
(9) On February 25, 2010, Dr. Eswar Prasad, 
an economist at Cornell University, testified before 
the U.S.-China Economic and Security Review Com-
mission that the amount of United States debt held 
by the People’s Republic of China is much higher 
than United States Treasury data indicate. In his 
revised testimony, Dr. Prasad went on to explain 
that China is probably currently holding more than 
$1,300,000,000,000 in United States Treasury secu-
rities. 
(10) According to a February 3, 2009, report 
by the Heritage Foundation, entitled ‘‘Chinese For-
eign Investment: Insist on Transparency’’, the State 
Administration of Foreign Exchange (SAFE) of the 
People’s Republic of China, the government body 
that purchases foreign securities, is the single larg-
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est global investor and the largest foreign investor in 
the United States. 
(11) According to a September 2008 Council on 
Foreign Relations report entitled ‘‘Sovereign Wealth 
and Sovereign Power,’’ ‘‘. . . political might is often 
linked to financial might, and a debtor’s capacity to 
project military power hinges on the support of its 
creditors . . . The United States’ main sources of fi-
nancing are not allies.’’. The report goes on to argue 
that, ‘‘the United States’ current reliance on other 
governments for financing represents an underappre-
ciated strategic vulnerability.’’. 
(12) In recent years, Chinese military officials 
have publicized the potential use of United States 
Treasury securities as a means of influencing United 
States policy and deterring specific United States 
actions. On February 8, 2010, retired People’s Lib-
eration Army (PLA) Major General Luo Yuan, from 
the PLA Academy of Military Science, stated in an 
interview with state-controlled media that China 
could attack the United States ‘‘by oblique means 
and stealthy feints’’, in retaliation for United States 
arms sales to Taiwan. He went on to say, ‘‘Our re-
taliation should not be restricted to merely military 
matters, and we should adopt a strategic package of 
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counterpunches covering politics, military affairs, di-
plomacy and economics to treat both the symptoms 
and root cause of this disease. For example, we 
could sanction them using economic means, such as 
dumping some U.S. government bonds.’’. 
(13) The PLA has also referenced the concept 
of nonmilitary aspects of deterrence in written state-
ments. A PLA textbook, ‘‘The Science of Military 
Strategy’’, observes that there are various forms of 
deterrence, including economic and technological, all 
of which need to be developed and consciously 
strengthened in order to maximize effect. These 
forms will only work ‘‘with the determination and 
volition of employment of the force, and by dangling 
the word of deterrence over the rival’s head in case 
of necessity.’’. 
(14) According to a May 16, 2011, report by 
ABC News, a congressional delegation of 10 United 
States Senators visited China in April 2011, and 
met with Chinese government officials. The news re-
port indicates that, during one meeting, the Sen-
ators were reprimanded by a Chinese official regard-
ing the mounting United States Federal debt. 
(15) A February 7, 2010, report by Defense 
News suggests that China’s extensive holdings of 
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United States Government securities have already 
directly influenced United States national security 
policy. According to an unnamed Pentagon official, 
Obama Administration officials softened a draft of a 
key national security document in order to avoid 
‘‘harsh words’’ that ‘‘might upset Chinese officials at 
a time when the United States and China are eco-
nomically intertwined.’’. The news report indicates 
that these officials ‘‘deleted several passages and 
softened others about China’s military buildup’’. 
This critical document, the 2010 Quadrennial De-
fense Review, provides an assessment of long-term 
threats and challenges for the Nation and is in-
tended to guide military programs, plans, and budg-
ets in the coming decades. 
(16) The United States Government pays China 
a substantial amount of interest on China’s 
$1,144,000,000,000 in holdings of United States 
Government debt, and this enhances China’s ability 
to fund its own military programs. 
(17) According to a March 4, 2011, report by 
Xinhua, the official press agency of the government 
of the People’s Republic of China, China plans to in-
crease its 2011 military budget by 12.7 percent to 
601,000,000,000 
yuan 
(the 
equivalent 
of 
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$91,500,000,000). This increase is in addition to 
China’s 2010 increase in its military budget of 7.5 
percent. 
(18) According to the Department of Defense’s 
(DoD) 2010 report entitled ‘‘Military and Security 
Developments Involving the People’s Republic of 
China,’’ the DoD estimates China’s actual total mili-
tary-related 
spending 
for 
2009 
to 
be 
over 
$150,000,000,000. 
SEC. 4. SENSE OF CONGRESS. 
It is the sense of Congress that— 
(1) the growing Federal debt of the United 
States has the potential to jeopardize the national 
security and economic stability of the United States; 
(2) the increasing dependence of the United 
States on foreign creditors has the potential to make 
the United States vulnerable to undue influence by 
certain foreign creditors in national security and 
economic policymaking; 
(3) the People’s Republic of China is the largest 
foreign creditor of the United States, in terms of its 
overall holdings of debt instruments of the United 
States; 
(4) the current level of transparency in the 
scope and extent of foreign holdings of debt instru-
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ments of the United States is inadequate and needs 
to be improved, particularly regarding the holdings 
of the People’s Republic of China; 
(5) through the People’s Republic of China’s 
large holdings of debt instruments of the United 
States, China has become a super creditor of the 
United States; 
(6) under certain circumstances, the holdings of 
the People’s Republic of China could give China a 
tool with which China can try to manipulate the do-
mestic and foreign policymaking of the United 
States, including the United States relationship with 
Taiwan; 
(7) under certain circumstances, if the People’s 
Republic of China were to be displeased with a given 
United States policy or action, China could attempt 
to destabilize the United States economy by rapidly 
divesting large portions of China’s holdings of debt 
instruments of the United States; and 
(8) the People’s Republic of China’s expansive 
holdings of such debt instruments of the United 
States could potentially pose a direct threat to the 
United States economy and to United States na-
tional security. This potential threat is a significant 
issue that warrants further analysis and evaluation. 
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