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Home » Trump, the Panama Canal and China’s Role: What We Know
International Relations

Trump, the Panama Canal and China’s Role: What We Know

potusBy potusFebruary 6, 2025No Comments5 Mins Read
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President Trump’s claim that China controls the Panama Canal has placed a Hong Kong tycoon and his conglomerate at the heart of a showdown between the United States and China.

That sprawling company, CK Hutchison Holdings, is one of Hong Kong’s most valuable publicly listed firms and counts some of the world’s biggest investors as shareholders. One of its subsidiaries, Hutchison Ports, has been involved in the Panama Canal since 1997.

Of Panama’s five ports, Hutchison’s are the biggest — one at each end of the canal. According to the Panama Maritime Authority, Hutchison’s ports last year served vessels carrying 39 percent of the cargo containers that passed through the canal, one of the world’s most vital waterways. (The other ports are owned by a Taiwanese company, a Singaporean company and an American-Panamanian joint venture.)

The company’s role brings to the surface unresolved questions for Washington about Beijing’s influence over Hong Kong, a special administrative region of China, which has become more pronounced in recent years. The Trump administration argues that China could use its influence over a Hong Kong company to force Panama to restrict American trade in the port.

What is CK Hutchison, and who is this tycoon?

The billionaire founder of CK Hutchison, Li Ka-shing, is a legend in Hong Kong. A high school dropout, Mr. Li, now 96, turned a small business selling plastic flowers into an empire spanning infrastructure, finance, retail and telecommunications.

Hutchison Ports, a subsidiary of CK Hutchison whose stock is listed in Singapore, operates the Balboa and Cristóbal ports on the Pacific and Atlantic sides of the Panama Canal. The company employs 30,000 people and operates 53 ports in two dozen countries. Its biggest shareholders are BlackRock and Vanguard, two of the world’s largest asset managers.

For decades until he retired in 2018, Mr. Li ran his business in a way that Chinese companies could not, capitalizing on Hong Kong’s free market and different laws. Like other Hong Kong entrepreneurs, Mr. Li cultivated ties with China’s top leaders in Beijing and invested in China.

But in more recent years, Mr. Li has sometimes spoken out about China’s increasing grip on Hong Kong. In 2019, when pro-democracy protests were met with police force and Beijing looked to the city’s elites to fall in line, Mr. Li called for the authorities to exercise restraint.

Since then, Mr. Li has sold much of his real estate holdings in China and pivoted some of his investments to Europe, a move that has angered Chinese nationalists.

What does Hutchison Ports do at the Panama Canal?

Hutchison has operated the Balboa and Cristóbal ports since 1997, when Panama granted it a 25-year concession. It is the only port operator in which the Panamanian government is a shareholder and receives payments for container movements through the canal and dividends.

But Hutchison’s concession to operate its ports, which was renewed for another 25 years in 2021, is now in question.

Panamanian authorities have promised to conduct an audit to verify that Hutchison “is properly reporting its revenues, payments and contributions to the state.” On Jan. 21, nearly a dozen auditors entered the company’s offices to begin their work.

In addition, two lawyers in Panama filed a lawsuit this week challenging the country’s contract with Hutchison, saying it violated Panama’s Constitution. The Chinese government said on Wednesday that it “believes that the government of Panama will provide a fair environment for enterprises including those from Hong Kong.”

Hutchison Ports and its parent, CK Hutchison, did not respond to repeated requests for comment.

If CK Hutchison is in Hong Kong, why is it being called Chinese?

That has to do with the unusual status of Hong Kong and its old-line companies like CK Hutchison.

Hong Kong was ruled by Britain for a century and a half before it was returned to China in 1997. Beijing promised that it would let the city operate with “a high degree of autonomy.” That changed in 2020 when Beijing imposed a national security law on Hong Kong after pro-democracy protests erupted in the city.

Beijing’s tight control over Hong Kong has snuffed out political opposition. Much of what made Hong Kong different from China, like a vibrant civic society and companies that could operate independently, has been eroded.

Mr. Trump, in his first term, signed an executive order revoking a special designation under American law that allowed the United States to treat Hong Kong differently from China on matters of immigration and trade. During his term, President Joseph R. Biden Jr. extended the executive order.

Authorities in Hong Kong, meanwhile, have taken steps to signal their loyalty to Beijing.

“Everything has to be ‘Hong Kong, China,’” said David Webb, a longtime Hong Kong investor. “It’s not really surprising that Hong Kong companies then get regarded as Chinese.”

What is mainland China’s involvement in Panama?

The Trump administration’s concern about China’s influence in Panama is part of broader worries about China’s Belt and Road Initiative, a program that has financed and built infrastructure projects around the world. Panama, in 2017, became the first Latin American country to join Belt and Road.

After a visit this week by Marco Rubio, the U.S. secretary of state, President José Raúl Mulino of Panama said he would not renew the Belt and Road agreement. But Beijing has already been scaling back its lending worldwide.

Panama has received $669.7 million worth of grants and loan commitments from China, about half as much as its neighbor Costa Rica, according to AidData, a research project at William & Mary in Williamsburg, Va. The biggest Chinese financing in Panama was a $200 million loan commitment in 2019 from the state-owned Export-Import Bank of China to a privately owned Panamanian bank.

China was planning to do more for Panama after a visit by its top leader, Xi Jinping, in 2018. But the president of Panama who had led a tilt toward Beijing, Juan Carlos Varela, left office in 2019.

Mary Triny Zea contributed reporting from Panama City, Annie Correal from Mexico City, and Zixu Wang from Hong Kong.



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