China Owes America Money?!

A strange statement to make I know. Currently China holds over a trillion dollars in US debt securities and there has been a lot of hand wringing over that fact; personally I consider the trillions of dollars held by the FED and Social Security Trust to be a bigger issue. So when someone makes the claim that China owes the US a lot of money, it draws me interest. According to the daily caller, China may owe US investors billions of dollars and it may total over a trillion. 

First things first, I wasn't convinced that this was entirely true, but it looks like Fox news did pick up on the story and the American Bond Holders Foundation looks legit at first glance. Now the crux of this entire issue is that this debt was accrued from 1900 to 1938 by the Republic of China, a technically defunct organization if we considered the People's Republic of Taiwan as separate entity. However, there is precedent of new political entities assuming the debt obligations accrued prior to its existence, the Russian Federation assumed many of the debts of the defunct U.S.S.R. The issue is does the PRC owe the debt that was accrued prior to it coming into power?  China has been mum on the matter, not outright refuting it according to the articles I have read, but ignoring it as well.

I don't really have an opinion on the matter since I just stumbled onto it, but it is interesting nonetheless. Assuming this is entirely legitimate, jury is still out, and considering that there is extensive debt owed to the US, how would this play in the geopolitical and economic game going on between the two nations?