China fires back at Panama Canal ports deal as geopolitical 'chess game' intensifies

Describing the agreement as "an act of hegemony by the US," Beijing argued it is not an ordinary commercial transaction but rather an attempt by Washington "to use national power to infringe upon the legitimate rights and interests of other nations".

The statement was published in an opinion piece by the Chinese state-owned Ta Kung Pao newspaper and later reposted on the website of China’s Hong Kong and Macao Affairs Office.

According to the article, the deal threatens China’s Belt and Road Initiative, as well as Hong Kong’s position as a global shipping and trade hub, ultimately “undermining international trade and maritime stability”.

The article concludes with a message to the involved companies, urging them to think twice about the “nature and crux of the issue” and carefully consider their stance.

Commenting on the situation, Drewry senior manager for container research Simon Heaney told Riviera this development is part of the broader geopolitical chess game currently unfolding.

Although the Panama ports sale is somewhat adjacent to the bigger deal, its success is not guaranteed. The deal will need to clear multiple competition hurdles worldwide, and “with the Chinese government clearly not thrilled by the agreement, a lot can happen before it becomes official”, Mr Heaney added.

Trump’s pressure

China’s opposition comes in response to the US$22.8Bn deal, which grants the BlackRock-MSC consortium control over Hutchison Port Holdings’ 90% stake in Panama Ports Co, the operator of Balboa and Cristobal ports in Panama. As part of the deal, the consortium will assume control of CK Hutchison’s 80% effective controlling interest in subsidiary and associated companies. These entities own, operate and develop 43 ports with 199 berths across 23 countries.

CK Hutchison co-managing director Frank Sixt stated the transaction resulted from a rapid, discreet, yet competitive process in which numerous bids and expressions of interest were received.

The deal followed Donald Trump’s statements regarding China’s influence over the Panama Canal. Notably, after the transaction was announced, the US President reiterated his stance on “reclaiming” control over the canal.

Addressing this claim, Mr Heaney said that while the idea of the US ’taking back’ the Panama Canal seems far-fetched, he doesn’t believe anything can be ruled out with this US administration. “Panama is doing its best to appease President Trump, but his threatening rhetoric hasn’t changed,” he added.

“There might be some concessions for American shipping to try and soothe things, but whether these will be acceptable to other parties – or dissuading President Trump from his larger ambitions – remains uncertain,” he concluded.

Strong cash generator

Founded by Hong Kong billionaire Li Ka-shing, CK Hutchison Holdings (CKH) is a multinational conglomerate with interests spanning retail, telecommunications, infrastructure, finance, and ports.

A recent Drewry analysis depicted that despite accounting for just 9% of CKH’s total revenue in the 12 months ending H1 2024, its ports business – operated under Hutchison Ports – has been a steady cash generator.

“With an impressive 35% EBITDA margin, this segment has significantly outperformed CKH’s overall margin of 23%,” noted Drewry maritime financial research senior manager Ankush Kathuria.