China Threatens to Block Panama Ports Deal in Protest of COSCO’s Exclusion

China threatened on Thursday to take steps that could derail a massive acquisition of port assets in the Panama Canal if the Chinese shipping giant COSCO does not receive a stake in the deal, according to the Wall Street Journal (WSJ).

This escalation comes after Hong Kong-based CK Hutchison Holdings Ltd. announced its intention to sell its entire stake in port operators Hutchison Port Holdings and Hutchison Port Group Holdings to a consortium led by US investment giant BlackRock. The sale is valued at approximately $23 billion, including $5 billion in debt.

Increasing Chinese Pressure

Chinese authorities have increased pressure on CK Hutchison since announcing the deal on March 4, expressing anger at the disregard for the interests of major Chinese companies, most notably COSCO. China points out that the deliberate exclusion of a Chinese company from the deal in a strategically important area such as the Panama Canal could threaten the geopolitical balance and serve American interests at the expense of Chinese security.

Expanded Control over Trade Lanes

If the deal is completed, the BlackRock-led consortium will gain operational control over more than 43 ports in 23 countries, including key ports in Mexico, the Netherlands, Egypt, Australia, and Pakistan, in addition to the ports of Balboa and Cristóbal at the entrances to the Panama Canal.

The company estimated the expected cash proceeds from the deal at more than $19 billion, stressing that the motives for the sale are “purely commercial” and unrelated to political tensions surrounding Panama, according to an official statement from CK Hutchison.

Concern in Hong Kong… and American Criticism

The Ministry of Hong Kong and Macau Affairs expressed deep concern about the repercussions of the deal, warning of its negative impact on Chinese interests and considering it a move that serves American influence in one of the world’s most important maritime passages. Former US President Donald Trump sparked controversy last January when he declared that the United States had a “historic right” to the Panama Canal, called for the resumption of “American control” over the waterway, and hinted at the possibility of military action if necessary. Panamanian President José Raúl Molino categorically rejected this claim, asserting that the canal is under full Panamanian national sovereignty.