Beijing is escalating its efforts by proposing that China’s shipping company, China Ocean Shipping Company (Cosco), gain control over a series of transactions including the port of Panama. The White House has unequivocally stated that it cannot accept this demand.
Billionaire Hong Kong tycoon Li Ka-shing’s company, CK Hutchison Holdings Limited (CK Hutchison), is in discussions to sell two ports located in the Panama Canal as well as over 40 other ports globally to a consortium led by American financial giant BlackRock.
According to sources cited by The Wall Street Journal on Tuesday, the Chinese side has made further demands, seeking majority control and veto rights over port operations, a move deemed unacceptable by all parties involved, leading to a deadlock in negotiations.
The report states that the White House stated on Monday that they too would not accept such demands.
A White House official told Huari, “The President has made it clear that allowing China to control the Panama Canal is unacceptable. This violates the U.S.-Panama Treaty and jeopardizes our national and economic security.”
Trump has consistently voiced concerns that allowing Chinese companies to control the Panama Canal poses a military security threat to the United States and views reclaiming control over the canal as a major political achievement.
In March, after concerns raised by President Trump regarding CK Hutchison and its connections with China, BlackRock and container shipping operator Mediterranean Shipping Company (MSC) reached a $22.8 billion acquisition deal.
Beijing was highly displeased with this development. In July, Huari cited sources reporting that Beijing pushed for Cosco to enter into this deal, requesting that this Beijing state-owned company become a partner and shareholder with equal ownership rights alongside BlackRock and Mediterranean Shipping Company.
China further threatened to block a planned transfer of dozens of port assets to Western investors if Cosco does not obtain shares in the deal.
Sources also revealed that China has instructed Chinese companies to freeze any transactions with CK Hutchison or its controlling shareholder – the Li Ka-shing family – and related entities.
The sources mentioned that BlackRock, Mediterranean Shipping, and CK Hutchison have all expressed willingness to accept Cosco’s involvement and provide equal ownership rights.
Every year, millions of containers bound for the United States are loaded and unloaded at CK Hutchison’s ports in the Panama Canal – Balboa Port and Cristobal Port. According to the Panama Canal Authority’s statistics, over 40% of U.S. container shipping uses this waterway to travel between Asia and the Americas.
BlackRock and CK Hutchison have commercial interests in China, while Mediterranean Shipping is one of the biggest proponents of China’s global exports.
In previous global merger cases, Chinese institutions have repeatedly abused their right to review transactions, sometimes proposing changes for political reasons.
For example, in 2014, Beijing used anti-monopoly powers to prevent three Western companies from forming a shipping alliance. At that time, Mediterranean Shipping Company, Denmark’s Maersk Group, and France’s CMA CGM Group planned to sign an agreement for vessel sharing and global port calls.