Sino-US tensions Heat Up Over Canal Sales
Beijing’s rebuke puts in question Li Ka-shing’s sale of ports in Panama, 23 other nations
By: Toh Han Shih
Tensions between the US and China have flared over the sale of ports in Panama and 23 other countries, including six on the strategic Suez Canal by Li Ka-shing’s CK Hutchison Holdings to BlackRock, a US financial giant apparently pushed into public service to make the transaction by the Trump administration.
The websites of two Chinese state offices carried a sharply-worded commentary scolding the US for gaining an advantage over China in controlling the world’s ports and warning Hutchison to think twice about selling them. Adding fuel to the fire, US President Donald Trump has ordered the US military to draw up options to increase US troop presence in Panama, NBC reported on March 13.
“We are entering a very unsettling period in the geopolitical arena,” said Andre Wheeler, chief executive officer of Asia Pacific Connex, an Australian consultancy. “There is every likelihood that troops will be sent, playing to the US domestic narrative of Making America Great Again. The actions of the US over the last few weeks give me the impression that Trump is working towards collapsing the current world order so that the US can rebuild it.”
Since December, Trump has repeatedly accused China of controlling the Panama Canal and called for the US to retake the strategic waterway, which US President Jimmy Carter ceded to Panama in the late 1970s.
Hutchison agreed to sell its 90 percent interest in the two ports on the east and west ends of the Panama Canal and its 80 percent stake in 43 ports in 23 countries to a consortium led by BlackRock, the Hong Kong-listed firm announced on March 4.
Hutchison’s share price plunged 6.4 percent to HK$46.25 on March 14, after Ta Kung Pao, a pro-Beijing Hong Kong newspaper, carried a scathing commentary against the company and the US on March 13, calling the company a traitor and urging CK Hutchison to reconsider selling the ports. The commentary was reproduced on the website of the Hong Kong and Macao Affairs Office (which coordinates policy among Beijing, Hong Kong and Macao) on March 13 and the website of the Liaison Office, the Chinese government’s representative office in Hong Kong, on March 14, indicating official displeasure.
“If America’s plans have their way, it will inevitably be a blow to China’s shipbuilding, shipping and foreign trade, and even the Belt Road Initiative. It will also affect the upgrading of Hong Kong as an international shipping and trading hub, and threatens to disrupt the order and security of global shipping and trade,” said the commentary.
The Belt and Road Initiative (BRI) is China’s trillion-dollar megaproject to connect with other nations through infrastructure like ports and canals.
Some online comment says the US may use this transaction as a template for Washington to apply political pressure to acquire more ports throughout the world, the commentary added, as a March 7 Asia Sentinel article speculated.
The BRI is the real issue in the commentary, said Asia Pacific Connex’s Wheeler. “China would not be happy as this deal does give the US an alternative port infrastructure network that provides a real challenge to the BRI network. It is an already-made network, but would have to be “sanitized” of embedded Chinese operating systems.”
In a recent CNBC television interview, BlackRock CEO Larry Fink said his company spent a “very concentrated period” of about two weeks to negotiate the port sale with CK Hutchison, coinciding with the time when Trump was applying pressure for the sale. The ports which BlackRock agreed to buy include the six on the Suez Canal, Fink pointed out. “Through this acquisition we are going to have 100 ports in our portfolio, and we look at this as a real milestone and a real opportunity.”
Through this deal, BlackRock will control 10.4 percent of the world’s container throughput and become one of the world’s three largest port operators, which would enable the US to apply political pressure against China, the Ta Kung Pao commentary pointed out.
Will Beijing scupper the deal?
It is reasonable to accuse CK Hutchison of “spinelessly bowing down, being mercenary, focusing on profits not righteousness, disregarding the interests of the nation and Chinese people, and betraying and selling out the Chinese people,” the commentary said.
“The company should think twice, carefully consider what are the problems and harm, and carefully consider which side it wants to be on,” the commentary warned.
Hutchison is in a difficult situation as it can’t please both the US and China, an Asian infrastructure consultant who declined to be named told Asia Sentinel.
“Wow, this is nasty. Li Ka-shing is sandwiched,” said a Singapore businessman who declined to be named.
Major CK Hutchison deals are still decided by Li Ka-shing, who is senior adviser to the company, rather than his eldest son Victor Li, the CK Hutchison chairman, said ex-banker who declined to be named.
“BlackRock’s Panama Canal deal may be in trouble,” said Bill Bishop, an American entrepreneur and former media executive, in an article on March 14 on his website Sinocism.
A consultant who declined to be named said Beijing can’t block the deal because it is a commercial transaction, as Hutchison’s March 4 announcement pointed out.
The port sale was not an ordinary commercial transaction, since Fink held many secret discussions with Trump on the deal, the Beijing commentary said. “It is clear that Trump and the US side do not regard this deal as an ordinary commercial transaction, but interfered in and controlled the deal without disguise or restraint, as a means to push for global dominance.”
BlackRock, the world’s biggest investment firm with US$11.5 trillion in assets under management (AUM) in 2024, is highly connected to Washington, since its executives have also been US government officials, Asia Sentinel reported on March 7.
“There is no love lost between the CCP (Chinese Communist Party) and the Li family,” a China-watcher said. “Li Ka-shing has already been scolded many times for not being patriotic enough and for pulling his investments out of mainland China and Hong Kong. Li Ka-shing and his sons have Canadian and other foreign passports, so they can leave Hong Kong anytime. If Beijing were to escalate the tirade against Li, he may leave Hong Kong altogether.”
Toh Han Shih is a Singaporean writer in Hong Kong and a regular contributor to Asia Sentinel