The E-Sylum:  Volume 5, Number 26, June 23, 2002, Article 14

CHINESE BONDS MAY RISE AGAIN

  A short article by Kimberly Weisul in the June 24, 2002
  issue of Business Week (p14), says "Don't Toss Those Old
  China Bonds"

  "From 1913 to 1949, China issued millions of dollars' worth
  of bonds. When the Communists came to power, they claimed
  the debt was the obligation of a capitalist government that no
  longer existed. They never paid.

  But with China's economy now booming, a group of 345
  families holding old Chinese debt are trying to get their money
  back.  They've persuaded 40 members of Congress to sign a
  letter to President Bush asking him to take up their cause with
  Beijing.  An additional 15 are considering signing, according
  to the group, the American Bondholders Foundation. (A
  Chinese Embassy spokesman declined to comment.)  The
  bonds have a face value of $731,000, says the bondholders'
  attorney, Riney Green. ABF claims that, with 50 to 85 years
  of interest, they're worth $89 billion.

  Fat chance, you say?   Political pressure has worked before.
  China paid British bondholders $23 million in 1987 after
  Britain refused to allow China to issue new debt in London.
  That was about 62% of face value -- so the Americans can't
  count on getting much.

  Getting anything, says Geert Rouwenhorst, an expert on
  Chinese debt at the Yale School of Management, "depends
  on the willingness of the politicians to make a big deal of this."

  Wayne Homren, Editor

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