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

NEW YORK – Could real estate on American soil owned by China be set up as “development zones” in which the communist nation could establish Chinese-owned businesses and bring in its citizens to the U.S. to work?

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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.”

Article Via: WND

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28 Responses

  1. DaCoachK says:

    I say we give them the blue states, starting with California, Massachusetts, New York, Illinois. The other blue states are able to be rehabilitated.

    • cold340t says:

      Yah,You Red states pay in less then they receive……….. Tax dollars that is! Your post is simple takers’ attitude towards those Blue States that subsidize you Reds states! Working full-time for Walmart/Waffle House and still on Welfare! Yes, we in the Blue States would welcome not having to support you Red staters’ going forward. The taxes we saved would go along way towards “rehabbing” our decrepit infrastructure don’t you think!?! 🙂 Ah, the demise of that great Red state sucking sound on OUR Blue state Economies! I feel the rehab as I type!
      Better learn Mandarin, cause’ it’s you Reds’ that will be owned by China.

      • DaCoachK says:

        Blah, blah, blah with the propaganda. The problem with my solution is the Chinese would give you people back. They don’t want illegal Mexicans and queers either.

        • cold340t says:

          I hope your in one of those states that is outlawing “hoodies”! Because it’s seems to be keeping you from thinking clearly when you post while wearing one. I can’t understand what you are trying to say 🙂
          You are “queer”? I that your message? Who is “they”? Didn’t realize Mid-America was ALL Mexican? Wow! And you are from?

          • DaCoachK says:

            I’ll say it real slow for you. If we did sell the BLUE states to China, they, the Chinese, would give them back because they, the BLUE states, are filled with homosexuals and illegal Mexicans. And the Chinese do not want either group.

      • Èrebus Àshlar says:

        Sounds to me you want a Civil war again. 😀 the south may have lost last time but they learned from last time. bet you dont win twice 😀 but no worries soon china will own the whole us. and your masters will be over seas as will your jobs United we stand divided we fall.

        • cold340t says:

          Yep, You People lost! Fact, get over it! I know it’s not fair you get back $2 for every $1 you send in tax money to Feds. So, enjoy your welfare status. Your Revolution is fully subsidized!
          Rmoney & Co. are the ones offshoring jobs. You know GOP/Teapotty Leaders!

          • Èrebus Àshlar says:

            Lmao. you seem to know nothing of the war if you think the south was poor and is poor now.

          • cold340t says:

            No the South was “rich” because they had almost no payrolls to meet. Aside from the Overseer and the Slave catchers that is. Its easy to make money when LABOR is FREE! “Southern Pride” sure showed them lazy Slaves how to work to death. Be Proud Southern Man/Women! Since things haven’t changed much, $2 from North for every $1 you put in to the TAX bucket. Be Proud!

          • Èrebus Àshlar says:

            Yawn check your ass . like your Opion every one has one but yours is extra runny

          • cold340t says:

            You have had too many “mint julips”while the Slaves were working. Being drunk only makes it seem like you did the work. You so funny!

        • Stormin' Norman says:

          So your answer to China taking our land is to instigate another internal Civil War between Americans? The last time the south lost was because they were staunch proponents of the democratic party, being more government dependent (in terms of laws), depending on cash crop, and paying less tariffs than the North. After their “loss” the south gained a lot from the North rebuilding it, making it Republican, and industrialized.

          Democraps have proven themselves to be the lowest swine in the political spectrum for a while now. The whole blue state/red state trend is yet another made up ploy to give the idiots in the south the idea that they weren’t at all a base for the liberal democrats for over half a century, and to give the northerners the idea that all their money now belongs to the democrapic party. Worst yet, they have seemingly been able to blame their opponents for the things they have done and have taken credit the successes their opponents have made.

          They all do it so we don’t know our real history and proceed on with their new revised history. Now thanks to the Republicans leads lowering themselves downward since Nixon, both parties are leaning in on it.

  2. Tim Tucker says:

    Give them the red states, especially those deep south Bible thumpers that have set our country back with their biblical babble since the inception of the Union. Goddamn teapubs have no grasp on what it take to be an american. It takes more than beer, guns and a 3rd grade education.

    • ActaNonVerba says:

      ” teapubs have no grasp on what it take to be an american. It takes more than beer, guns and a 3rd grade education. ”
      Hahaha. Talk about being a hypocrite…..typical.

      ” it takes to be an American .”- You’re welcome.

      If the crap ever hits the fan what, you think you’ll be able to talk your way out of it? Non-cognitive think much? We’re yalls last hope, but then again I like the idea of given them the jackass states.

  3. teeip says:

    When the US railways infrstructure was built by Chinese workers long ago, the contributing Chinese were not even granted permits PR or citizenship in US despite the hard labour to enhance US economy.How to obtain a landmass in the middle of US?
    China honored the contract to give up Hong Kong to the British and Macao to Portuguese. for 100 years although it was signed by Manchurian rulers.

  4. BendCris says:

    This is all irrelevant…We are headed for something far more grand than land ownership on planet earth. Just make sure you have lots of popcorn and sit back and watch the show unfold.

  5. Om Prakash Sharma says:

    It would be another catastrophy after Hiroshima and Nagasaki

  6. claude1864 says:

    If this happens we the people will start shooting chinese!

  7. Paul M says:

    Why are you posting a 3 year old story (that never happened) as current news?

    • Some articles here are posted from other websites, and we are mentioning
      that (not post it as current news). We are posting it as info (archive)
      for people who are interested to know.

  8. Jason Bentvelzen says:

    China lost bad during the crash and want something more. They mention a guarantee. I get that. Everyone lost big during the crash. I don’t think we should keep on this boom and bust cycle. I’d prefer a have a steady, well regulated economy. You cant cut up regulations and expect not to get in trouble. It kills everyone when America falls.

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