I 
111TH CONGRESS 
2D SESSION 
H. R. 5319 
To increase transparency regarding debt instruments of the United States 
held by foreign governments, to assess the risks to the United States 
of such holdings, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 18, 2010 
Mr. SAM JOHNSON of Texas introduced the following bill; which was referred 
to the Committee on Ways and Means 
A BILL 
To increase transparency regarding debt instruments of the 
United States held by foreign governments, to assess 
the risks to the United States of such holdings, and 
for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Foreign-Held Debt 
Transparency and Threat Assessment Act’’. 
SEC. 2. FINDINGS. 
Congress makes the following findings: 
VerDate Mar 15 2010 
06:21 May 19, 2010
Jkt 089200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H5319.IH
H5319
PWALKER on DSK8KYBLC1PROD with BILLS
(1) On March 16, 2006, the United States Sen-
ate debated and then narrowly passed legislation, H. 
J. Res. 47 (109th Congress), to increase the statu-
tory 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, ‘‘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. Gov-
ernment can’t pay its own bills. It is a sign that we 
now depend on ongoing financial assistance from 
foreign countries to finance our Government’s reck-
less fiscal policies.’’. Then-Senator Obama went on 
to say that ‘‘Increasing America’s debt weakens us 
domestically and internationally. Leadership means 
that ‘the buck stops here’. Instead, Washington is 
shifting the burden of bad choices today onto the 
backs of our children and grandchildren. America 
has a debt problem and a failure of leadership. 
Americans deserve better.’’. 
(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 security 
VerDate Mar 15 2010 
06:21 May 19, 2010
Jkt 089200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H5319.IH
H5319
PWALKER on DSK8KYBLC1PROD with BILLS
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 Secretary 
went on to say that reliance on foreign creditors has 
hit the United States ‘‘ability to protect our security, 
to manage difficult problems and to show the leader-
ship that we deserve.’’. 
(3) 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. 
(4) The Federal debt stands at more than 
$12,863,000,000,000. 
(5) According to a report issued by the Depart-
ment of the Treasury on April 15, 2010, entitled 
‘‘Major Foreign Holders of Treasury Securities’’, 
foreign holdings of United States Treasury securities 
stood at more than $3,750,000,000,000 at the end 
of February 2010. China was the single largest hold-
er with holdings of more than $877,000,000,000. 
(6) Despite efforts by the Department of the 
Treasury to identify the nationality of the ultimate 
holders of United States securities, including United 
VerDate Mar 15 2010 
06:21 May 19, 2010
Jkt 089200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H5319.IH
H5319
PWALKER on DSK8KYBLC1PROD with BILLS
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 26, 2010, enti-
tled ‘‘Preliminary Report on Foreign Holdings of 
U.S. Securities At End—June 2009’’, assigns nearly 
$650,000,000,000 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. 
(7) Despite efforts by the Department of the 
Treasury to provide more timely information, the 
data that the Department releases is typically out-
dated. For example, the latest figures in the Feb-
ruary 26, 2010, report on all United States securi-
ties were 8 months old. 
(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-
VerDate Mar 15 2010 
06:21 May 19, 2010
Jkt 089200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H5319.IH
H5319
PWALKER on DSK8KYBLC1PROD with BILLS
sion that United States Treasury data understate 
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 
VerDate Mar 15 2010 
06:21 May 19, 2010
Jkt 089200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H5319.IH
H5319
PWALKER on DSK8KYBLC1PROD with BILLS
that purchases foreign securities, is the single larg-
est global investor and the largest foreign investor in 
the United States. 
(11) According to the February 3, 2009, report, 
although the People’s Republic of China has em-
braced the Generally Accepted Principles and Prac-
tices for Sovereign Wealth guided by the Inter-
national Monetary Fund, China’s actual outward-in-
vestment practices are far from transparent. 
(12) On March 13, 2009, Chinese Premier Wen 
Jiabao demanded that the Obama Administration 
‘‘guarantee the safety’’ of American bonds, stating, 
‘‘We have lent a huge amount of money to the 
U.S.’’. 
(13) According to the Department of Defense’s 
2009 report to Congress entitled, ‘‘Military Power of 
the People’s Republic of China’’, the leaders and 
strategists of the People’s Liberation Army (PLA) 
often consider China’s strategy in terms of building 
‘‘comprehensive national power’’. The report con-
tends that China’s growing regional and global eco-
nomic stature will result in ‘‘a more active external 
posture in which it [China] demonstrates a willing-
ness to assert its interests . . .’’. 
VerDate Mar 15 2010 
06:21 May 19, 2010
Jkt 089200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H5319.IH
H5319
PWALKER on DSK8KYBLC1PROD with BILLS
(14) Additionally, the Department of Defense 
report states that, ‘‘China’s sustained economic 
growth . . . has enabled China to focus greater re-
sources on building, equipping, and training the 
PLA without overwhelming the economy.’’. Though 
the PLA’s official budget has more than doubled 
from $27,900,000,000 in 2000 to $60,100,000,000 
in 2008, the report states that the official budget 
‘‘does not capture the totality of military expendi-
ture.’’. The report maintains that, ‘‘Continued eco-
nomic development, central to China’s emergence as 
a regional and global power, remains the foundation 
of the [Chinese Communist] Party’s popular legit-
imacy and underwrites its military power.’’. 
(15) On January 29, 2010, the Department of 
Defense notified Congress of its intent to sell various 
defensive arms, valued at $6,400,000,000, under the 
Foreign Military Sales program to Taiwan in ac-
cordance with the Taiwan Relations Act (22 U.S.C. 
3301 et seq.). 
(16) On February 2, 2010, at a semiweekly 
media briefing, Ma Zhaoxu, spokesman of China’s 
foreign ministry, criticized these pending arms sales 
to Taiwan, threatening sanctions against United 
States companies involved in the sales. 
VerDate Mar 15 2010 
06:21 May 19, 2010
Jkt 089200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H5319.IH
H5319
PWALKER on DSK8KYBLC1PROD with BILLS
(17) PLA 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 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 
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.’’. 
(18) The PLA has also referenced the concept 
of nonmilitary aspects of deterrence in written state-
ments. As a PLA textbook, ‘‘The Science of Military 
Strategy’’, observes, there are various forms of de-
terrence, including economic and technological, all of 
which need to be developed and consciously strength-
ened in order to maximize effect. These forms will 
only work ‘‘with the determination and volition of 
VerDate Mar 15 2010 
06:21 May 19, 2010
Jkt 089200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H5319.IH
H5319
PWALKER on DSK8KYBLC1PROD with BILLS
employment of the force, and by dangling the word 
of deterrence over the rival’s head in case of neces-
sity.’’. 
SEC. 3. DEFINITIONS. 
In this Act: 
(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. 4. SENSE OF CONGRESS. 
It is the sense of Congress that— 
VerDate Mar 15 2010 
06:21 May 19, 2010
Jkt 089200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H5319.IH
H5319
PWALKER on DSK8KYBLC1PROD with BILLS
(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-
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 
VerDate Mar 15 2010 
06:21 May 19, 2010
Jkt 089200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H5319.IH
H5319
PWALKER on DSK8KYBLC1PROD with BILLS
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. 
SEC. 5. QUARTERLY REPORT ON RISKS POSED BY FOREIGN 
HOLDINGS OF DEBT INSTRUMENTS OF THE 
UNITED STATES. 
(a) QUARTERLY REPORT.—Not later than March 31, 
June 30, September 30, and December 31 of each year, 
the President shall submit to the appropriate congres-
sional committees a report on the risks posed by foreign 
holdings of debt instruments of the United States, in both 
classified and unclassified form. 
(b) MATTERS TO BE INCLUDED.—Each report sub-
mitted under this section shall include the following: 
VerDate Mar 15 2010 
06:21 May 19, 2010
Jkt 089200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H5319.IH
H5319
PWALKER on DSK8KYBLC1PROD with BILLS
(1) The most recent data available on foreign 
holdings of debt instruments of the United States, 
which data shall not be older than the date that is 
7 months preceding the date of the report. 
(2) The country of domicile of all foreign credi-
tors who hold debt instruments of the United States. 
(3) The total amount of debt instruments of the 
United States that are held by the foreign creditors, 
broken out by the creditors’ country of domicile and 
by public, quasi-public, and private creditors. 
(4) For each foreign country listed in para-
graph (3)— 
(A) an analysis of the country’s purpose in 
holding debt instruments of the United States 
and long-term intentions with regard to such 
debt instruments; 
(B) an analysis of the current and foresee-
able risks to the long-term national security and 
economic stability of the United States posed by 
each country’s holdings of debt instruments of 
the United States; and 
(C) a specific determination of whether the 
level of risk identified under subparagraph (B) 
is acceptable or unacceptable. 
VerDate Mar 15 2010 
06:21 May 19, 2010
Jkt 089200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H5319.IH
H5319
PWALKER on DSK8KYBLC1PROD with BILLS
(c) PUBLIC
AVAILABILITY.—The President shall 
make each report required by subsection (a) available, in 
its unclassified form, to the public by posting it on the 
Internet in a conspicuous manner and location. 
SEC. 6. ANNUAL REPORT ON RISKS POSED BY THE FED-
ERAL DEBT OF THE UNITED STATES. 
(a) IN GENERAL.—Not later than December 31 of 
each year, the Comptroller General of the United States 
shall submit to the appropriate congressional committees 
a report on the risks to the United States posed by the 
Federal debt of the United States. 
(b) CONTENT OF REPORT.—Each report submitted 
under this section shall include the following: 
(1) An analysis of the current and foreseeable 
risks to the long-term national security and eco-
nomic stability of the United States posed by the 
Federal debt of the United States. 
(2) A specific determination of whether the lev-
els of risk identified under paragraph (1) are sus-
tainable. 
(3) If the determination under paragraph (2) is 
that the levels of risk are unsustainable, specific rec-
ommendations for reducing the levels of risk to sus-
tainable levels, in a manner that results in a reduc-
tion in Federal spending. 
VerDate Mar 15 2010 
06:21 May 19, 2010
Jkt 089200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H5319.IH
H5319
PWALKER on DSK8KYBLC1PROD with BILLS
SEC. 7. CORRECTIVE ACTION TO ADDRESS UNACCEPTABLE 
AND 
UNSUSTAINABLE 
RISKS 
TO 
UNITED 
STATES NATIONAL SECURITY AND ECONOMIC 
STABILITY. 
In any case in which the President determines under 
section 5(b)(4)(C) that a foreign country’s holdings of 
debt instruments of the United States pose an unaccept-
able risk to the long-term national security or economic 
stability of the United States, or the Comptroller General 
of the United States makes a determination under section 
6(b)(3), the President shall, within 30 days of the deter-
mination— 
(1) formulate a plan of action to reduce the risk 
level to an acceptable and sustainable level, in a 
manner that results in a reduction in Federal spend-
ing; 
(2) submit to the appropriate congressional 
committees a report on the plan of action that in-
cludes a time line for the implementation of the plan 
and recommendations for any legislative action that 
would be required to fully implement the plan; and 
(3) move expeditiously to implement the plan in 
order to protect the long-term national security and 
economic stability of the United States. 
Æ 
VerDate Mar 15 2010 
06:21 May 19, 2010
Jkt 089200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6301
E:\BILLS\H5319.IH
H5319
PWALKER on DSK8KYBLC1PROD with BILLS