CONFIRMING THE OBVIOUS : WHY ANTIQUE CHINESE BONDS SHOULD REMAIN ANTIQUE

As the Sino-U.S. relationship goes on a downward spiral, increasingly more strange things have come out to haunt the two biggest economies in the world. One of these things involves the idea to make China pay for the sovereign bonds issued by its predeceasing regimes almost a century ago. This paper takes the idea seriously and maps out the possible legal issues surrounding the revival of these bonds. Although two particular bonds show some potential for being revived – the Hukuang Railways 5% Sinking Fund Gold Bonds of 1911 and the Pacific Development Loan of 1937 – the private bondholders would likely not be able to toll the statute of limitations on the repayment claims based on these bonds. Even in the unlikely scenario that they succeed in doing so, the Chinese government would have an arsenal of contract law arguments against the enforcement of these bonds, most notably the duress and impracticality defense. By going into the details of the legal arguments and history of these bonds, we seek to confirm the obvious, that is, the idea of making China pays for these bonds is as far-fetched as they sound like and would not be taken seriously by the court