Search on TFTC
China's $1 Trillion Debt to American Citizens

China's $1 Trillion Debt to American Citizens

Apr 8, 2024

China's $1 Trillion Debt to American Citizens

In a striking revelation that contrasts sharply with current narratives, Andrew Hale at The Hill has brought to light the fact that China is in default on over a trillion dollars' worth of debt owed to American citizens. This debt, which dates back to the 1930s, was incurred by the then-Republic of China through loans from private investors and governments. However, following the communist revolution, the new regime opted to retain the assets while disregarding the liabilities, a move counter to centuries of established international law that dictates the assumption of both assets and debts by successor governments.

The Hill

The United States, in a twist of financial irony, continues to pay approximately $50 million each day in interest on $800 billion in treasuries held by China, despite the fact that China has ceased to honor its own debt obligations to America. This situation is in stark contrast to historical precedents where nations have settled old debts, such as Germany's reparations payment for World War I in 2010 and Britain's payment on bonds from the 18th century in 2015. Notably, the United Kingdom even received payment on similar Chinese sovereign debts in 1987, which facilitated China's access to British capital markets.

The legacy of these unpaid debts, gold-denominated as was the norm before President Franklin D. Roosevelt's tenure, has ballooned to an estimated worth between $1 trillion and $1.6 trillion today. With the debt remaining unserviced, it continues to accumulate unpaid interest, potentially doubling the total U.S. debt held by China.

This paradox is further compounded by the assertion of economist Gordon Tulloch, who claimed that the communist takeover of China was effectively facilitated by the U.S. State Department during the post-World War II era. Tulloch's account suggests a division of influence between the State Department and the Department of Defense, the latter of which prevented the spread of communism to strategic locations such as Taiwan and Japan.

In the absence of a strong stance from the Biden administration, the debt issue remains unresolved, leaving the United States in a seemingly subservient financial position.


Current Block Height

Current Mempool Size

Current Difficulty