China Poised To DEMAND U.S. LAND As Payment For U.S. Debt

China Poised To DEMAND U.S. LAND

As Payment For U.S. Debt

truther July 1, 2015

That’s part of an evolving proposal Beijing has been developing quietly since

2009 to convert more than $1 trillion of U.S debt it owns into equity.

Under the plan, China would own U.S. businesses, U.S. infrastructure and U.S.

high-value land, all with a U.S. government guarantee against loss.

 

Yu Qiao, a professor of economics in the School of Public Policy and

Management at Tsighua University in Beijing, proposed in 2009 a plan for the

U.S. government to guarantee foreign investments in the United States.

WND has reliable information that the Bank of China, China’s central bank, has

continued to advance the plan to convert China’s holdings of U.S. debt into

equity owned by China in the U.S.

The Obama administration, under the plan, would grant a financial guarantee

as an inducement for China to convert U.S. debt into Chinese direct equity

investment. China would take ownership of successful U.S. corporations,

potentially profitable infrastructure projects and high-value U.S. real estate.

The plan would be designed to induce China to resume lending to the

U.S. on a nearly zero-interest basis.

However, converting Chinese debt to equity investments in the United States

could easily add another $1 trillion to outstanding Obama administration

guarantees issued in the current economic crisis.

As of November 2012, China owned $1.17 trillion in U.S. Treasury securities,

according to U.S. Department of Treasury and Federal Reserve Board

calculations published Jan. 16.

video

https://www.youtube.com/watch?feature=player_embedded&v=Iln_HcAgLTs

China Poised To DEMAND U.S. LAND As Payment For U.S. Debt

truther July 1, 2015 0

That’s part of an evolving proposal Beijing has been developing quietly since

2009 to convert more than $1 trillion of U.S debt it owns into equity.

Under the plan, China would own U.S. businesses, U.S. infrastructure and

U.S. high-value land, all with a U.S. government guarantee against loss.

Yu Qiao, a professor of economics in the School of Public Policy and

Management at Tsighua University in Beijing, proposed in 2009 a plan for the

U.S. government to guarantee foreign investments in the United States.

WND has reliable information that the Bank of China, China’s central bank, has

continued to advance the plan to convert China’s holdings of U.S. debt into

equity owned by China in the U.S.

The Obama administration, under the plan, would grant a financial guarantee

as an inducement for China to convert U.S. debt into Chinese direct equity

investment. China would take ownership of successful U.S. corporations,

potentially profitable infrastructure projects and high-value U.S. real estate.

The plan would be designed to induce China to resume lending to the

U.S. on a nearly zero-interest basis.

However, converting Chinese debt to equity investments in the United States

could easily add another $1 trillion to outstanding Obama administration

guarantees issued in the current economic crisis.

As of November 2012, China owned $1.17 trillion in U.S. Treasury securities,

according to U.S. Department of Treasury and Federal Reserve Board

calculations published Jan. 16.

Concerned about the unrestrained growth in U.S. debt under the Obama

administration, China has reduced by 97 percent its holdings in short-term

U.S. Treasury bills. China’s holding of $573.7 billion in August 2008, prior to

the massive bank bailouts and stimulus programs triggered by the

collapse in the U.S. mortgage market, dwindled to $5.96 billion by March 2011.

Treasury bills are short-term debt that matures in one year or less, sold to

finance U.S. debt. Holdings of Treasury bills are included in the $1.17 trillion

of total Treasury securities owned by China as of November 2012.

In addition to a national debt in excess of $16 trillion, the U.S. government in

2010 faced over $70 trillion in unfunded obligations, including Social Security

and Medicare benefits scheduled to be paid retiring baby boomer retirees

in the coming decades, with unfunded obligations showing no sign of

being reduced with Congress at a deadlock over reducing federal government

spending.

Yu Qiao observed that if the U.S. dollar collapsed under the weight of proposed

Obama administration trillion-dollar budget deficits into the foreseeable future,

holders of U.S. debt would face substantial losses that the Financial Times

estimated “would devastate Asians’ hard-earned wealth and terminate

economic globalization.”

“The basic idea is to turn Asian savings, China’s in particular, into real

business interests rather than let them be used to support U.S. over-

consumption,” Yu Qiao wrote, reflecting themes commonly suggested by

Chinese government officials. “While fixed-income securities are vulnerable

to any fall in the value of the dollar, equity claims on sound corporations

and infrastructure projects are at less risk from a currency default,” he continued.

The problem is that, in a struggling U.S. economy, China does not want to trade

its investment in U.S. Treasury debt securities, with their inherent risk of dollar

devaluation, for equally risky investments in U.S. corporations and infrastructure

projects.

“But Asians do not want to bear the risk of this investment because of market

turbulence and a lack of knowledge of cultural, legal and regulatory

issues in U.S. businesses,” he stressed. “However if a guarantee scheme

were created, Asian savers could be willing to invest directly in capital-hungry

U.S. industries.”

Yu Qiao’s plan included four components:

1. China would negotiate with the U.S. government to create a “crisis relief facility,” or CRF. The CRF “would be used alongside U.S. federal efforts to stabilize the banking system and to invest in capital-intensive infrastructure projects such as high-speed railroad from Boston to Washington, D.C.
2. China would pool a portion of its holdings of Treasury bonds under the CFR umbrella to convert sovereign debt into equity. Any CFR funds that were designated for investment in U.S. corporations would still be owned and managed by U.S. equity holders, with the Asians holding minority equity shares “that would, like preferred stock, be convertible.”
3. The U.S. government would act as a guarantor, “providing a sovereign guarantee scheme to assure the investment principal of the CRF against possible default of targeted companies or projects”.
4. The Federal Reserve would set up a special account to supply the liquidity the CRF would require to swap sovereign debt into industrial investment in the United States.

“The CRF would lessen Asians’ concern about implicit default of sovereign debts

caused by a collapsing dollar,” Yu Qiao concluded. “It would cost little and help

the U.S. by channeling funds to business investment.”

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