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China and Hong Kong are speaking out against a planned deal to place key ports on the Panama Canal, currently held by a Chinese company, under US control.
This comes amidst reports that the Chinese government would be investigating CK Hutchinson’s sale of the two key Panama ports to US investment giant BlackRock, in a deal likely partially motivated by President Trump’s plans to place the crucial waterway back under American control.
On Tuesday, 18 March, Bloomberg reported that senior Chinese government officials have instructed state agencies, including the State Administration of Market Regulation, China’s main antitrust agency, to study the sale for potential breaches of security or antitrust issues. The deal, announced on 4 March, involves CK Hutchinson, a Hong Kong-based conglomerate, selling controlling stakes in a total of 45 ports in 23 countries, including the Balboa and Cristobal ports, to a group of investors backed by BlackRock. This would make BlackRock the world’s third-largest port operator, giving it control over 10.4% of global container traffic.
The deal was speculated to have been at least partially due to Trump’s insistence that the Panama Canal go back under US control, which he reiterated during the State of the Union address. While the proposed sale would not give the canal itself back to the US, instead handing over management of two ports at either end of it to an American company, the Trump administration has claimed it as a win.
However, pushback from China and Hong Kong, as well as Panama, whose government needs to approve the sale before it goes ahead, is threatening to jeopardise the deal. A spokesperson for the Chinese foreign ministry commenting on the deal said that “China has always firmly opposed the use of economic coercion, hegemonism and bullying to infringe upon the legitimate rights and interests of other countries,” while John Lee, Hong Kong’s Chief Executive, said on Tuesday that the country opposed “the abusive use of coercion or bullying tactics in international, economic, and trade relations.”
While neither the Chinese nor the Hong Kong governments have explicitly spoken out about the sale and lack an obvious route to stopping it as the buyer and port are outside Chinese territory, oblique statements and the rumoured additional scrutiny on the deal are likely to further delay the sale.
The Chinese government could intervene with the sale by using antitrust laws that restrict extraterritorial sales with an effect on domestic competition or by designating the sale as having national security implications. While direct action to completely halt the sale is unlikely, recent comments and the reports of an investigation into the deal point to increased government scrutiny and potential pushback. China isn’t alone in disapproving of the deal, with Panama’s president, José Raúl Mulino, saying on 5 March in response to Trump’s comments that the canal “is Panamanian and will continue to be Panamanian.”
China, Hong Kong, and Panama’s pushback against the deal risk disrupting the sale placing a shadow of uncertainty on one of the few global shipping channels that have been until now unaffected by geopolitical tensions and delaying BlackRock’s proposed investments in the ports. In the wider context, this could represent a further trend of resistance to the US’s recent efforts to regain the hegemony of the last century.
The Trump administration’s attempts to place itself back at the centre of the global political and economic stage through increased tariffs, involvement in major conflicts, and attempts to exert more control on emerging economies have all been met with international pushback. Global trade is one of the industries most affected by this, thanks both to its inherent vulnerability to geopolitical uncertainty and to Trump’s aggressive tariff strategies; that international attention is shifting to crucial shipping channels could put the industry even more on edge, potentially affecting supply chains all over the world.
