There has been a significant change in the relationship between Panama and the Chinese Communist Party (CCP) recently. Panama’s Supreme Court ruled unconstitutional the concession rights held by a subsidiary of Hong Kong-based CK Hutchison Holdings Ltd., which operates key ports at both ends of the Panama Canal.
Many analysts believe that the ruling by Panama’s Supreme Court signifies that many small countries are finally realizing the situation and starting to turn towards the United States. The CCP would rather let Li Ka-shing, the owner of CK Hutchison, lose everything than back down in the face of confrontation with the U.S. This decision marks a beginning of the CCP’s global influence hitting a roadblock and declining, which is a victory for the U.S. and its allies.
On the evening of the 29th local time, Panama’s Supreme Court issued a brief statement declaring the concession contract signed between the Panama government and the Hong Kong company controlled by the Li Ka-shing family, known as “Panama Ports Company” (PPC), for the development, construction, operation, and management of the Balboa and Cristobal ports at the ends of the Panama Canal, as unconstitutional.
According to a report from the Panama Canal Authority initiated in January last year, PPC’s operations under the concession agreement since 2021 have resulted in losses of around $300 million for the Panamanian government. If calculated over the initial 25-year contract period, the estimated total loss could reach $1.3 billion.
This ruling is based on an investigation by the Panamanian Office of the Comptroller General. The Comptroller General, Anel Flores, pointed out several irregularities in the 25-year contract extension that PPC obtained in 2021. These include unpaid amounts, accounting errors, and alleged “ghost” concessions within the ports since 2015.
Panama’s current President Mulino has instructed the Panama Maritime Authority to meet with Panama Ports Company to coordinate “necessary actions” following the ruling. He stated that port operations will continue without interruption or staff layoffs.
Mulino has repeatedly stated that the operation contract of Panama Ports Company does not align with Panama’s national interests. In February last year, Mulino formally announced the country’s withdrawal from the Belt and Road Initiative, severing potential cooperation with China on major infrastructure projects.
The Panama Canal, initially built by the U.S., was transferred to the Panamanian government’s sovereignty in 1999 as per agreements between the two countries. Today, the U.S. and China are the countries with the highest frequency of using this canal. The U.S. accounts for 40% of the canal’s total traffic annually, while China holds 21.4%. Nearly 5% of the world’s maritime cargo ships pass through this vital waterway, referred to as one of the new seven wonders of the world and the “bridge of the world.”
Upon assuming office in January last year, U.S. Secretary of State Marco Rubio chose Panama as his first overseas visit, clearly expressing that the U.S. views the operation of Panama’s ports as a “national security issue.”
On March 4, 2025, CK Hutchison announced the formation of the Bailey-BlackRock-MSC consortium with BlackRock and Mediterranean Shipping Company (MSC) and the sale of its port operations in several countries, including the ports at both ends of the Panama Canal held by Panama Ports Company, valued at a total of $23 billion.
However, the CCP threatened to block this transaction that goes against its national interests. In December last year, according to sources cited by The Wall Street Journal, the Chinese side initially requested the state-owned enterprise COSCO to participate in the investment as an equal shareholder. But now, Beijing has raised the stakes in negotiations, threatening to impede the transaction unless COSCO gains a majority stake with veto power.
A White House official at the time immediately stated that such conditions would not be accepted, emphasizing that President Trump had made it clear that Chinese control over the Panama Canal was unacceptable, violating the U.S.-Panama Treaty and endangering national security and economic security.
Cheng Qinmo, Associate Professor of Diplomacy at Tamkang University in Taiwan, told The Epoch Times that this case highlights the aggressive and misjudged nature of the CCP’s wolf warrior diplomacy. Despite President Trump’s maximum pressure, the CCP not only refuses to compromise but also aims to have the Chinese state-owned enterprise COSCO take over the port operation rights at the Panama Canal ports, with the requirement of having veto power. This audacious demand is unacceptable not only to Americans but has also sparked strong anti-China sentiment among the local population in Panama.
Cheng Qinmo believes that this event also exposes the shortcomings of the CCP’s “one-man decision-making” system. Regardless of how absurd and misjudged the decision-making is, under the one-man autocratic system, the bureaucratic system collectively lays flat, allowing events to proceed towards the worst outcome.
Wu Jialong believes that Panama’s shift signifies that many small countries around the world have finally realized the situation and are beginning to turn around, to reverse course.
The ruling by Panama’s Supreme Court, as Chairman of the China Task Force in the U.S. House of Representatives Mullinal stated, “is a victory for the United States, Panama, and all allies who recognize the importance of the canal to national security and the global economy.”
On January 30, Rubio posted on the X social platform, stating that the recent ruling by Panama’s Supreme Court declaring the concession rights to China unconstitutional is encouraging for the United States.
Former U.S. Ambassador to Panama John Feeley told The Washington Times, “This is a diplomatic setback for China (the CCP), but not an economic setback.”
Cheng Qinmo stated that the ruling by Panama’s Supreme Court can be said to end the struggle for operational rights at the Panama Canal ports between the U.S. and China over the past year. This also indicates another victory for President Trump in the geopolitical confrontation between the U.S. and China in Central and South America and a significant defeat for the CCP, greatly weakening its influence in the region.
Political and economic commentator Wu Jialong told The Epoch Times that if the ruling by Panama’s Supreme Court stands, it indicates a change in direction that will have a demonstration effect. It will make some countries that were originally leaning towards China, such as Honduras, the Dominican Republic, and even South Korea, realize that aligning with China is not profitable or secure.
He said, “The signal is clear that the global influence of the CCP has hit a wall and is starting to decline. What we see is China’s rise from a great power to a fallen great power.”
Regarding the statement by the Chinese Ministry of Foreign Affairs on the ruling by Panama’s Supreme Court, spokesperson Guo Jiakun stated in a routine press conference on January 30 that the relevant companies have issued statements indicating that the ruling contradicts Panama’s laws approving the relevant concession rights, and the companies will retain all rights, including legal proceedings. China will take all necessary measures to “resolutely” defend the legitimate rights and interests of Chinese companies.
In response to China’s statement, veteran American media personality Fang Wei discussed on his YouTube show “Good Morning America” on the 30th that the CCP is authoritarian and only does things that harm others without benefiting itself. Even top billionaires like Li Ka-shing and Jack Ma, despite their vast wealth, have no way to resist the CCP.
Fang Wei said Li Ka-shing just wanted to avoid getting involved in the U.S.-China conflict by trying to sell the Panama Canal, a hot potato. He thought that by selling it and making money, it would be good. But the CCP would rather see Li Ka-shing lose everything than let him sell, even though they know that confronting the U.S. is a losing battle, they still prefer to see Li Ka-shing lose everything and stand against the U.S., which is the nature of the CCP.
Cheng Qinmo stated that the CCP’s control over private enterprises, even those registered in Hong Kong, cannot escape the political pressure of national interests necessary for business investments, confirming the accusation that the CCP uses the Hong Kong national security law to control Hong Kong companies and exposing the lies about safeguarding the private property rights of private enterprises made by the CCP.