Panama Canal. Image by The Hong Kong-listed CK Hutchison corporation became the target of China’s ire after the corporation seemed poised to make a multibillion-dollar port deal with a US-led international consortium, selling 43 ports with 199 berths in 23 countries.
The deal was initially set to be signed on or before April 2, 2025, but it is now on hold due to Beijing’s opposition.
Multibillion-dollar deal on hold
The agreement, which was announced on March 4, 2025, took Beijing by surprise as among the 43 ports are the two biggest ports in Panama, Cristobal and Balboa.
The buyer is the US investment firm BlackRock Inc., along with Global Infrastructure Partners (GIP), an infrastructure investment firm recently acquired by BlackRock, and Terminal Investment Limited (TiL), a terminal operator owned by a Geneva-based Mediterranean Shipping Company.
Once the deal was made public, US President Donald Trump hailed victory for “reclaiming” the Canal, while Hong Kong-listed CK Hutchison was quickly blamed for China’s diplomatic setback.
Eventually, China’s State Administration for Market Regulation stated it would review the deal to ensure fair market competition and protect public interests, and the Hong Kong-based multinational had to defer its plan.
It’s now uncertain if the deal will go through at all, even though the package did not include any ports from China and Hong Kong.
Geopolitical scientists pointed out that Beijing’s reaction was related to its interest in maintaining the country’s global trade network:
Hutchison was the single largest Chinese company in the business. A deal for 43 ports in 23 countries–199 berths–would have meant one-third of #PRC’s global port network wiped out instantly. Ryan Berg, PhD.
However, its decision has now both jeopardised Hong Kong’s image as a free-trade center and also seemingly verified Donald Trump’s accusation that Hutchison was acting as an extended arm of China to control the artificial canal that connects the Caribbean Sea with the Pacific Ocean.
Chinese interference allegations
The foreign interference allegations could become an excuse for the US to take control of the Panama Canal by force under the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal, which was signed in 1977, when the US handed the Canal over to Panama.
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It guarantees that the Canal shall be permanently neutral to vessels of all nations both in time of peace and in time of war and that the US could use its military to defend the Panama Canal against any threat to its neutrality.
In fact, Donald Trump threatened to take over the Canal soon after his presidential inauguration. He accused China of foreign interference in Panama and described the Canal transit fee as “exorbitant”.
The Chinese government rebuked the accusation, stressing that “China does not take part in managing or operating the Canal. Never ever has China interfered.”
Panama also denied the Chinese interference claim, but under US pressure, the country eventually quit China’s Belt and Road Initiative in early February 2025 and has been strengthening ties with the US:
Panama will now allow United States Navy ships free passage through the Panama Canal, saving the United States millions of dollars a year. The development comes after Secretary of State Marco Rubio’s trip to Panama. “U.S. government vessels can now transit the Panama Canal without charge fees, saving the U.S. government millions of dollars a year,” the State Department announced. Panama also promised to distance itself from China. Collin Rugg.
And, on the legal front, Panama’s attorney general backed the claim that concessions with Hong Kong’s Hutchison Ports on the Panama Canal are “unconstitutional”.
Caught in the crossfire between Beijing and Washington, CK Hutchison’s deal was initially well-received by the market, as reflected in its stock price surge.
The USD 22.8 billion sell-off could generate USD 19 billion in cash and could prevent further political pressure from the US government, which might result in the nullification of Hutchison’s port contract with Panama.
Since 1997, Hutchison has invested over USD 2 billion in the two port facilities, and in 2021, the concession was extended for another 25 years.
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China’s role
However, China is not happy. Although the Chinese foreign ministry still stuck to the political line that the allegation concerning China’s control over the Canal was a lie and protested “economic coercion, hegemonism and bullying” after the agreement was released.
Hong Kong-based Chinese propaganda slammed CK Hutchison’s deal as a betrayal of the “motherland” through a series of commentaries which were republished on the website of Beijing’s top office on Hong Kong and Macau Affairs.
The patriotic opinion pieces were first published in China’s state-funded Ta Kung Pao on March 14. The first piece rejects CK Hutchison’s explanation that the deal was a purely commercial decision.
It describes Blackrock’s role as an expanding US port operator that would repress China’s international trade upon taking over CK Hutchison’s port and concludes the deal was an act of betrayal:
[Social media users] in general strongly criticise the deal and CK Hutchison for being spineless, grovelling and profit-seeking. [Such an act] trades away one’s integrity for personal gains, disregards national interests, and betrays all Chinese people.
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The second commentary praises other Hong Kong business leaders, including Henry Fok Ying-tung and Yue-kong Pao, for staying loyal to the party and, in particular, highlights Huawei founder Ren Zhengfei’s role in safeguarding the technological sovereignty of the Chinese telecommunication industry.
It urges Chinese businessmen to safeguard China’s national interest. The third and fourth pieces were written in a similar manner, stressing the need for the business sector to serve national interest and demanding that CK Hutchison suspend the deal.
Pro-Beijing influencers also relay China’s discontent. @Hnbhger17, for example, argued on X that CK Hutchison should prioritize selling its port to Chinese corporations, or the deal would negatively impact China’s national security.
Many media outlets interpreted the propaganda messages as a sign that the Chinese president, Xi Jinping, was angry about the deal. Meanwhile, Hong Kong’s top leader, John Lee, stressed:
We oppose the abusive use of coercion, of bullying tactics in international economic and trade relations […] the SAR government will ensure that any transactions are made in accordance with the law.
Eventually, China said it would scrutinise the port deal for any potential security breaches or antitrust violations. Yet, since CK Hutchison is registered in the Cayman Islands and the port deal has not included any port in Chinese territories, both Hong Kong and China have a relatively weak legal position to challenge the agreement.
Though, as law expert Kevin Yam pointed out, the Hong Kong’s National Security Committee still has the power to give legally binding directions to the Li family or the Hong Kong-based multinational to procure the halting of the Panama port deal, adding that such an act would be a “nuclear option” that could cause immense harm to the business sector.
CK Hutchison’s retired founder Li Ka-Shing has faced many rounds of political criticism in the past decade — in October 2014, he was criticised by China’s state-owned Xinhua News for not vocally denouncing the pro-democracy Umbrella Protests.
The state-owned news outlet again criticised Li for moving his investment offshore to the Cayman Islands after a major corporate restructuring in 2015.
Li dismissed the so-called “Cultural Revolution style” criticisms. In 2019, during Hong Kong’s pro-democracy protest movement, Li faced similar criticism as he did not use strong words to condemn the street protests.
Li Ka-Shing retired in 2018 and handed over his businesses to his son, Victor Li. The 96-year-old tycoon remains a legendary figure. He built his business empire from scratch after his family fled to Hong Kong in 1940 amid the Second Sino-Japanese War (1937–1945).
He was among the first batch of Hong Kong businessmen who brought foreign capital into Chinese special economic zones after former Chinese leader Deng Xiaoping adopted the Open Door Policy in the 1970s.
While China’s interest in the port in Panama makes sense, the dispute could very well scare foreign investments and multinationals away from Hong Kong.
