Ports, Politics & Power – Here’s Why China Threatens To Block Panama Ports Deal Unless Cosco Gets A Stake

Ports, Politics & Power – Here’s Why China Threatens To Block Panama Ports Deal Unless Cosco Gets A Stake


July 18th, 2025 by financetwitter


Mixing business with pleasure often leads to conflicts of interest and negatively impacts business and professionalism. But mixing business with politics could lead to a very complex and risky consequences. CK Hutchison found out the hard way when it announced a mega deal in March 2025 to sell its 90% stake in Panama’s ports of Balboa and Cristobal, and some 43 ports across 23 countries.

Underestimating the backlash from Beijing, Hong Kong’s richest family, led by “Superman” Li Ka-shing, thought problems would disappear on its own by remaining silent. It’s hard to believe that the billionaire was clueless about China’s potential reaction even before he tried to sell his port empire to a U.S.-led consortium spearheaded by investment giant BlackRock.


Back in January 2025, during his inaugural address, President Donald Trump repeated his accusations that China was controlling the Panama Canal, which cuts across the Central American nation and is the main link between the Atlantic and Pacific oceans. He also threatened to take the canal back by force, citing “exorbitant” fees being charged for US vessels to pass through it.


The 82km (51-mile) canal was built and owned by the U.S. in the early 1900s before being ultimately given to Panama in 1977 under a treaty that guaranteed its neutrality. In truth, the U.S. is the biggest user of the canal – responsible for about three-quarters of the cargo moving through it each year, while China is a distant second. Trump’s wild accusation was rubbished by Panama.

Panamanian President José Raúl Mulino described Trump’s claim as “nonsense” because there was “absolutely no Chinese interference” in the canal. However, there is a port at either end of the canal that is operated by Li Ka-shing’s CK Hutchison. This could be what Trump was referring to when he said – “China is based at both ends of the Panama Canal”.


But a total of five ports are adjacent to the canal, with others owned by foreign companies, including U.S. ones. In 1996, Panama granted CK Hutchison (then known as Hutchison-Whampoa) a concession to operate the Balboa port on the Pacific side, and Cristobal port on the Atlantic side. The contract did not give Hutchison-Whampoa ownership of the ports, but merely to operate them on behalf of the government of Panama.


In 1999, the U.S. State Department said in response to the awarding of the concessions to Hutchison-Whampoa that its officials had researched the issue extensively and “have not uncovered any evidence to support a conclusion that the People’s Republic of China will be in a position to control canal operations”. Clearly, Trump was politicizing the Panama Canal to suppress China’s rising influence.

Panama was the first Latin American country to sign Chinese President Xi Jinping’s “Belt and Road Initiative (BRI)” in 2017. Washington was deeply concerned that it would open the door for Beijing to gain leverage not only on Panama, but over other countries, therefore, undermining the U.S. hegemony. In a war or trade dispute, the U.S. fears Hutchinson could be pressured by Beijing to do its bidding.

From October 2023 to September 2024, China accounted for 21.4% of the cargo volume transiting the Panama Canal, making it the second-largest user after the United States. In recent years, China has also invested heavily in ports and terminals near the canal. Strategic information on ships passing through the waterway flows through the ports would be very useful in the event of a supply chain war.


The U.S. was also not impressed that Panama broke diplomatic ties with Taiwan in 2017 and established formal relations with China – a huge win for Chinese diplomacy. The Dominican Republic, El Salvador, Nicaragua, and Honduras followed suit and also severed ties with Taipei in favour of Beijing. The Chinese gaining influence in the “backyard” of the U.S. has upset the White House.



To make matters worse, China has slowly expanded its soft power by opening its first Confucius Institute in Panama – even providing a grant to build a railway. Chinese companies have also sponsored “media training” for Panamanian journalists, paving ways for Beijing to expand its footprint on a continent that has traditionally been considered the territory of the U.S.

But after two weeks of silence since Li Ka-shing’s plan to sell Hutchison’s ports for a whopping US$23 billion was unveiled, the billionaire was forced to back down on March 28, 2025 when the conglomerate said it would not proceed with the expected signing of a deal on April 2, 2025 to sell its two strategic ports at the Panama Canal. The business deal has angered Beijing.


On the same day, news emerged that Beijing would launch an antitrust probe into the sale. The saga would continue for months, deteriorating into a geopolitical war intertwined with a trade war between the U.S. and China. Caught in the crosshair, China’s news media has started targeting Mr Li, even though the Hong Kong tycoon had retired as chairman of CK Hutchison Holdings on March 10, 2018.

Less than 10 days after CK Hutchison announced the deal on Mar 4, 2025, Beijing-controlled newspaper, Ta Kung Pao, which is based in Hong Kong, published two sharply worded commentaries, urging the Li family to “stop being naïve and confused”. They condemned CK Hutchison for being unpatriotic and “selling out all Chinese people.”

The fierce attack marked the first time Beijing has publicly singled out Hong Kong’s most prominent conglomerate for sharp criticism in the 27 years since the city’s return to Chinese sovereignty in 1997, causing jitters and concerns about the politicisation of business in the local and broader business community. And there’s a reason why Beijing was incredibly angry.




Unlike BlackRock chairman and CEO Larry Fink, who took the trouble to call U.S. President Donald Trump to secure his blessing, Li Ka-shing did not inform Beijing of the deal in advance – a sign of arrogance. While Trump hailed the deal as part of his administration’s efforts to reclaim the Panama Canal, Mr Xi was caught unaware of the deal that would see China losing influence over key shipping routes.

Despite insisting that the sale was purely commercial in nature and unrelated to geopolitics concerning the Panama ports, Ta Kung Pao and another pro-Beijing Hong Kong newspaper, Wen Wei Po, have published at least 20 news stories and commentaries urging the Li family to respond to “public concerns” and halt the deal in the name of national interests and security.

Adding salt to the wound, Bloomberg reported on March 26, 2025 that CK Hutchison would be moving forward with the deal as scheduled, despite Beijing’s anger over the transaction. In response, the Hong Kong and Macao Affairs Office expressed its displeasure by reposting two articles published by Ta Kung Pao on Mar 26 and 27, criticising Hutchison for “kowtowing” to U.S. pressure and sacrificing national interests.


Ta Kung Pao also suggested applying China’s Anti-Foreign Sanctions Law against CK Hutchison, which allows Beijing to impose countermeasures on foreign entities that enforce sanctions or harm China’s interests and has advocated for punitive measures if the deal goes forward. The newspaper also invoked Hong Kong’s National Security Ordinance, further signaling potential legal challenges.

Although CK Hutchison is registered in the Cayman Islands and its owner, Li Kai-shing, has moved most of its assets to Canada, both China and Hong Kong still retain some leverage. Under the context of “national security”, Beijing and Hong Kong could argue that the CK Hutchison-BlackRock deal threatens China’s national security and warrants intervention from the State to safeguard it.



Now, the Wall Street Journal reported that the Chinese’s government is threatening to block the controversial deal if Cosco, China’s largest shipping company, doesn’t get a stake. Apparently, Beijing wanted state-owned Cosco to be an equal partner and shareholder of the ports with the consortium consisting of BlackRock and Mediterranean Shipping Co.


BlackRock, MSC and Hutchison – parties supposedly to reach a deal before the July 27, 2025 deadline – all are now open to Cosco’s taking a stake, suggesting that Beijing indeed has the tools and power to stop the deal. However, at the same time, any deal giving a stake in the Panama ports to a Chinese-owned company would likely upset President Trump.

Chinese authorities have told Chinese state-owned companies to freeze any coming deals with Hutchison or other businesses linked to its controlling shareholder, the family of the Hong Kong billionaire Li Ka-shing. Essentially, the order from Beijing can be seen as a temporary sanction on Mr Li’s business empire, a war that the tycoon cannot win.

The Panama ports deal was so significant that during U.S.-China trade talks in Switzerland in May, Chinese representatives raised the prospect of China’s involvement in the deal. In addition, Chinese officials have told BlackRock, MSC and Hutchison that if Cosco is left out of the deal, Beijing would take steps to block Hutchison’s proposed sale.


Even if Mr Li defiantly ignores Beijing and his family decides to quit entirely from China and Hong Kong businesses, which they won’t, BlackRock is not interested to offend Beijing. BlackRock, which manages more than US11 trillion in assets, has had a presence in China for more than a decade. It was among the first foreign asset managers to set up wholly foreign-owned operations in Shanghai in 2017.


“I continue to firmly believe China will be one of the biggest opportunities for BlackRock over the long term, both for asset managers and investors, despite the uncertainty and decoupling of global systems we’re seeing today,” – Mr. Fink said in a letter to the firm’s shareholders in 2020. Having received approval to set up mutual fund business in China, BlackRock isn’t going to burn the bridge just to save the US$23 billion Panama ports deal.