Trump, Xi Will Decide Li Ka-shing’s Port Sale

CK Hutchison will likely sell BlackRock ports in Panama, but not Asia or Middle East

By: Toh Han Shih

CK Hutchison Holdings, the Hong Kong-listed conglomerate controlled by Li Ka-shing, Hong Kong’s richest man, is torn between rival superpowers, the US and China. Although CK Hutchison said its agreement to sell ports to BlackRock is purely commercial, it is highly probable that US President Donald Trump and Chinese President Xi Jinping will restructure the deal. It is unlikely that CK Hutchison will sell all 40-odd ports to BlackRock as earlier agreed.

On March 4, CK Hutchison announced it had agreed to sell two ports on both ends of the Panama Canal and 43 ports in 23 countries to BlackRock, a US financial firm, pending approval of regulators. Hong Kong and China regulators are unlikely to allow this deal to go through in its current form, for various reasons.

On March 21, Ta Kung Pao, a pro-Beijing Hong Kong newspaper, published a commentary which explicitly told CK Hutchison to halt the transaction. Although the Hong Kong-listed firm said this was a purely commercial deal, the Ta Kung Pao commentary said those who called the deal a legal transaction were “naïve and silly.” The commentary cited a law enacted in Hong Kong last year, safeguarding China’s sovereignty, security, and national interest.

If the US firm acquired so many ports in so many nations, it would weaken the international competitiveness of Chinese companies, threaten China’s trade and manufacturing as well as hurt the Belt and Road Initiative (BRI), China’s megaproject to forge economic links with other countries through infrastructure like ports, the commentary argued. Thus, this deal will violate Hong Kong law, the commentary said.

This commentary by a pro-Beijing newspaper carries weight, since its two earlier commentaries, which were also scathing about the port sale, were published on the website of two Chinese state offices in Hong Kong, the Hong Kong and Macao Affairs Office and the Liaison Office, since March 13, indicating the criticism has Beijing’s backing.

The two offices also published on their websites a critical statement by former Hong Kong chief executive Leung Chun-ying and one by the current chief executive John Lee saying CK Hutchison must abide by the law. This suggests the Hong Kong government could take legal action to block the deal.

Between March 13 and March 21, CK Hutchison’s share price has fallen by 12.4 percent to HK$43.25.

During the Two Sessions in Beijing earlier in March, a top Chinese leader summoned CK Hutchison chairman Victor Li, Li Ka-shing’s eldest son, over the port sale, reported Green Bean Media, a Hong Kong-linked media, on March 16.

CK Hutchison and BlackRock did not reply to Asia Sentinel’s questions.

Victor Li’s statement in CK Hutchison’s 2024 annual results, released on March 20 was revealing in what he said and what he did not say. Li made no mention of the port sale, although his company announced it on March 4. It is unusual for the firm not to mention a deal which it had announced days earlier, as it has in previous results announcements. In its 2020 results announcement, for instance, the company said that in August 2020, it had entered into an agreement to develop and operate a container terminal in Egypt and in February 2021, it agreed to invest in and develop several ports in Saudi Arabia.

In the 2024 announcement, Victor Li said CK Hutchison “will constrain capital spending and new investment.” Yet in a March 4 press release, CK Hutchison co-managing director Frank Sixt said his firm would gain more than US$19 billion in cash from selling the 40-odd ports to BlackRock. If CK Hutchison expects a windfall of over US$19 billion, its chairman wouldn’t constrain capital spending and new investment. This suggests the deal is on hold or off.

Victor Li, in the current announcement, expects “moderate organic growth” from CK Hutchison’s ports mainly in Asia and the Middle East. He made no mention of his company’s existing ports on the Panama Canal and other parts of the Americas, Europe, and Australia. Under the agreement with BlackRock, CK Hutchison is to sell 40-odd ports in the Americas including Panama, two ports in Australia, 12 ports in the Middle East, 13 ports in Europe, and nine ports in Asia excluding China. CK Hutchison will retain its ports in Hong Kong and mainland China. If this deal went ahead, CK Hutchison would no longer control ports in the Middle East and Asia excluding China. So why did Victor Li say he expects growth from CK Hutchison’s ports in Asia and the Middle East?

Li’s statement indicates CK Hutchison won’t sell its Asia and Middle East ports to BlackRock as earlier agreed, but will sell those in the Americas including Panama and other parts of the world. CK Hutchison’s Middle East ports, including the Suez Canal, are highly strategic to China. It is inconceivable that Beijing would allow the US to control this strategic waterway which enables convenient shipping from Europe to Asia. Moreover, Beijing is unlikely to cede control of more ports in Asia to the US, since Asia is China’s backyard.

Although BlackRock is a private US company, its ties to Washington run deep, since its executives have also been US government officials, Asia Sentinel reported on March 7. In an interview with CNBC earlier in March, BlackRock chairman Larry Fink said the addition of CK Hutchison’s 40-plus ports will increase BlackRock’s global network to 100 ports. Beijing will perceive these ports to be under Washington’s control and a threat to the BRI.

However, it is unfeasible for the Chinese government to prevent Li Ka-shing from selling all 40-odd ports. China has little leverage to prevent the US from gaining control of the Panama Canal, since it is in the US’s backyard with a strong US naval and military presence nearby. China’s navy does not have the reach and power to match the US in America’s backyard.

Since December, US President Donald Trump has repeatedly accused China of controlling the Panama Canal and called for the US to reassert its influence in the waterway.

In an interview on March 19, US Secretary of State Marco Rubio said, “The President has been abundantly clear about it, and that is that the Panama Canal cannot be an outpost for the Chinese, because we built it and we intend to have influence over it.”

“We wake up one day and Chinese influence is all over the canal. They – Hong Kong-based companies, which obviously must respond to Chinese law, control all the key ports on – the key ports on both sides, the infrastructure deeply ingrained there benefited the Chinese, and that’s just not sustainable and it can’t continue,” Rubio said.

While the Chinese government is unlikely to allow CK Hutchison to sell all the 40-odd ports to BlackRock, the US government, backed by its military muscle, is unlikely to allow CK Hutchison to renege on its agreement to sell the Panama ports.

With such strong conflicting positions between the two superpowers, only a compromise is possible, not by CK Hutchison and BlackRock, but only by Trump and Xi. In the interview on March 19, Rubio said a meeting between Trump and Xi will happen, but the meeting has not been scheduled yet. When they meet, they will likely discuss and restructure the port deal.

Toh Han Shih is a Singaporean writer in Hong Kong and a regular contributor to Asia Sentinel