US dismissal of suit may cloud Peking bond hopes

China has welcomed a United States Supreme Court decision dismissing claims by holders of pre-1949 Chinese bonds, but an American diplomat warns that Peking has a long way to go before it will be able to issue bonds in the US. A Foreign Ministry spokesman told a news briefing yesterday that China welcomed a ruling that rejected a petition by holders of railway bonds issued in 1911 by the Qing Dynasty. The communist government does not acknowledge the debt.

The ruling upheld a decision by a federal appeals court in Atlanta last July which dismissed a suit by American bondholders seeking payment of more than $41 million from the Chinese government.

``We welcome the ruling of the Supreme Court,'' the ministry spokesman said. ``It indicates the ... railway bearer bonds case is finally closed.''

But the US diplomat said two other bond cases are still in litigation and it is not known whether other courts will accept the Supreme Court ruling.

An official of the state-owned China International Trust and Investment Corporation, which has raised funds in Hong Kong; Tokyo; and Frankfurt, West Germany, declined comment on the court decision.

Earlier this year, the official said conditions were not yet ripe for China to issue bonds in the US. ``There is still the question of the old debts. We are cautious and do not want to take a risk,'' he said.