China isn’t happy about sale of Panama Canal port to American finance giant

Last week’s agreement to sell two ports on the Panama Canal to a U.S. consortium led by BlackRock appeared to be another example of the savvy deal-making that has made Hong Kong tycoon Li Ka-shing one of the richest men in Asia.

Facing intense pressure from U.S. President Donald Trump, Mr. Li’s CK Hutchison Holdings moved quickly to divest itself of an increasingly awkward asset, one that was at risk of being seized by either the Panamanian or U.S. governments. And it got a good return – BlackRock has agreed to pay US$19-billion for a majority stake in Hutchison Ports – just as global trade disruptions mean traffic through the canal could decrease, making the ports less profitable.

Hutchison – a global conglomerate with stakes in everything from telecommunications to airport parking – was facing heavy scrutiny for being a “Chinese” company amid Mr. Trump’s renewed trade war with China.

The BlackRock deal was announced as Chinese leaders were meeting in Beijing for the annual session of the country’s rubber-stamp parliament, so most observers assumed it was done with the tacit approval of Beijing, which had repeatedly distanced itself from Hutchison, saying China had no political influence over Panama – nor did it seek any.

Late Thursday, however, a state-run newspaper in Hong Kong blasted Hutchison’s move as a “betrayal of all Chinese people” and a “mercenary act which disregards national interests.” The unsigned op-ed was republished on the website of the Hong Kong and Macao Affairs Office of the State Council, the Chinese body responsible for its two special administrative regions.

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In an ironic mirroring of Mr. Trump’s own accusations of Chinese control of the Panama Canal, the op-ed said that under Blackrock ownership, the U.S. could use the ports “for political purposes and promote its own political agenda.”

“China’s shipping and trade here will inevitably be subject to the U.S.,” it added, just as Washington was “doing its utmost to contain and suppress China’s development.”

“Faced with such a major event and a matter of great justice, the relevant companies should think twice, think carefully about the nature and crux of the issue, and think carefully about what position and side they should stand on,” the op-ed said.

Beijing’s apparent unhappiness with the BlackRock deal sent Hutchison shares tumbling almost 7 per cent Friday and illustrated the increasingly delicate line many Hong Kong-based companies must walk as they straddle both the Chinese and Western markets while facing political pressure and scrutiny in both.

Hutchison did not respond to a request for comment about the op-ed, nor did the Hong Kong and Macao Affairs Office.

Speaking to the South China Morning Post, Lau Siu-kai, an academic close to the Hong Kong and Beijing governments, said the op-ed “reflects Beijing’s dissatisfaction over the deal.”

“Even if CK Hutchison Holdings is under pressure to sell the ports, why among all options will it decide to sell it to an American company which will technically hand the control of the ports to the country?” Mr. Lau told the paper. “It remains uncertain whether the deal has been signed, but the central government would like to see whether there is any leeway, though the United States will also not easily let CK Hutchison Holdings go if it breaks the agreement.”

Were Hutchison to back out of the deal, or face repercussions from Beijing for making it, it could hasten Hong Kong’s shift in Western eyes from a semi-autonomous territory bridging East and West to just another part of China. That transformation began in 2020, when Beijing imposed a draconian national security law on the city after months of protests. A crackdown in the years since has raised questions about Hong Kong’s continued commitment to the rule of law.

Already, many businesses are weighing their futures in Hong Kong given the increased U.S. tariffs on Chinese goods and the possibility the territory might be hit with similar measures.

Speaking to Reuters last week, a board member of a leading Hong Kong business with interests locally and overseas, including retail and property, said it has become clear that “Hong Kong is being increasingly lumped in with China.”

“To a degree, this has raised the complexity and cost in our business dealings. We have to live with this.”

Another senior executive in the city told the news agency they had been “constantly reviewing our business plan and discussing about our strategy because of the political tension.”

“For example, do we still want to list our units in Hong Kong and is Hong Kong still attractive as a listing venue, because investors could draw a China connection,” he said.

Neither person was named by the news agency because of the sensitivities of discussing such matters publicly.