Can the U.S. default on its debt held by the Chinese by using Imperial Chinese debt notes as a pretext to do so? This seems far-fetched and almost absurd to do so, but there has been numerous story about it saying the U.S. could default by saying the amount owed plus the interest owed by China is a pretext for seizing Chinese debt and defaulting on it.


Bianco says she’s spent years researching China’s legal obligations and recruiting high-profile proponents to the ABF team, including Bill Bennett, who was U.S. Secretary of Education under Ronald Reagan; Brian Kennedy, senior fellow at the Claremont Institute; and Michael Socarras, Bush’s nominee for Air Force general counsel. By Bianco’s reckoning, China owes more than US$1 trillion on the defaulted debt, once adjusted for inflation, interest, and other damages—a sum roughly equivalent to China’s holdings of U.S. Treasuries.

  • 3
    Why would this (if legally sound - IANAL) be considered a default? Surely it would be a simple case of China paying the US money that it was legitimately owed.
    – jamesqf
    Sep 3, 2019 at 4:36
  • For what it’s worth, the big banks do this sort of thing with debt that they owe each other literally almost every day. It’s why there’s a delay between when you pay for something with electronic money transfer, and when the payment actually goes through.
    – nick012000
    Sep 3, 2019 at 13:21

1 Answer 1


The 14th amendment makes defaulting on US public debt, be it held by the Chinese or anyone else, unconstitutional:

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

  • 8
    I guess the contention would be that this strategy is not a default, it is an adjustment assigning an outstanding debt from Imperial China to the US against the debts owed by the US to PRC a successor state?
    – Jontia
    Sep 3, 2019 at 6:37
  • 1
    It's still technically a default unless the PRC agrees to it.
    – Joe C
    Sep 3, 2019 at 18:59

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