Hong Kong’s richest man Li Ka-shing’s company, CK Hutchison Holdings, plans to sell the operating rights of a Panama Canal port to the BlackRock-TiL consortium led by BlackRock, causing displeasure in Beijing with Li Ka-shing being criticized for betraying the country. The Hong Kong-based newspaper “Ta Kung Pao” recently pointed out that the Chinese Communist Party is reviewing the transaction between CK Hutchison and the consortium led by the American BlackRock based on China’s Anti-Monopoly Law, National Security Law, and Data Security Law.
Observers believe that China’s proposal to review Li Ka-shing’s port transaction based on these three laws is a pretext and a form of extraterritorial jurisdiction that may deter foreign investment, further impacting China’s economy negatively. As the port’s sovereignty lies with Panama, amid the U.S.-China rivalry, Panama may ultimately be forced to comply with government mandates.
On March 28, China’s State Administration for Market Regulation responded to questions on whether the transaction complies with China’s Anti-Monopoly Law regarding its extraterritorial jurisdiction principle. According to Chinese media reports, the review period may last up to six months. The Chinese Foreign Ministry on March 31 expressed strong opposition to the use of economic coercion that harms the legitimate rights of other countries.
“Ta Kung Pao,” on March 31, cited some experts suggesting that the deal between CK Hutchison and the BlackRock-TiL consortium should be reviewed based on China’s Anti-Monopoly Law, National Security Law, and Data Security Law.
Experts noted that while this transaction involves foreign ports, it may impact Chinese shipping companies’ operating costs and supply chain security through the international shipping chain, thereby justifying extraterritorial application.
However, Bryan Mercurio, a professor at the Chinese University of Hong Kong specializing in international economic law and bilateral trade agreements, pointed out the challenge for Chinese authorities to prove the transaction’s competitive impact since such effects may not be immediately apparent.
According to China’s Anti-Monopoly Law, if a cross-border transaction leads to market concentration and the operators’ revenue meets reporting standards within China, approval from the State Administration for Market Regulation is necessary before implementation.
Yet, sources familiar with the matter have suggested that the buyer in this transaction is an asset management company that conducts business through fund investments and management rather than direct market transactions, possibly not meeting China’s reporting requirements in terms of revenue within the country.
Analyzing the situation, a law firm noted that in this transaction, the BlackRock-TiL consortium, as the operator gaining control or having decisive influence, holds the reporting obligation. Failure to report in accordance with the law would entail legal responsibility on the consortium rather than CK Hutchison.
Sam Pap, a current affairs commentator with a legal background, pointed out that there are no explicit provisions in China’s laws requiring CK Hutchison to obtain approval from the Beijing government before selling the overseas port operating rights. These fabricated reasons by the Chinese authorities may deter foreign investments, further jeopardizing economic stability.
According to recent public information, the final documents for the sale of two ports near the Panama Canal are expected to be signed by April 2.
However, as reported by Reuters on March 29, two informed sources revealed that due to increased pressure from Beijing, CK Hutchison will not sign the agreement as scheduled, intending to sell the two port operations near the Panama Canal to the BlackRock-TiL consortium.
Does this indicate the potential cancellation of the deal? Several Hong Kong and overseas media outlets reported on March 28 that CK Hutchison postponed the signing of the agreement for the sale of the two ports near the Panama Canal, but that doesn’t necessarily signify the deal’s cancellation.
The Axios news website also reported on March 28 that sources mentioned the BlackRock-TiL consortium and CK Hutchison are still actively discussing the transaction and undergoing due diligence, with the signing date potentially being delayed by weeks or even months.
On March 28, when asked about China’s regulatory scrutiny of the acquisition, a U.S. State Department spokesperson at a press briefing stated that “China’s discontent with this acquisition is not surprising because it will reduce their control over the Panama Canal region.”
A current affairs commentator based in Canada, “Master Shen,” pointed out that China has issued a serious threat to Li Ka-shing, causing him to hesitate. Li Ka-shing may delay the agreement, giving face to Beijing as if China has a say, ultimately benefiting the United States in the ongoing power struggle between the two nations.
“In this tug of war, China wouldn’t want to lose much face, hence may provide concessions to the U.S. while maintaining its stance in China,” mentioned “Master Shen.”
Regarding China’s move to invoke the three laws to scrutinize the transaction, senior commentator Tang Jingyuan believes that China’s actions may not yield the desired effect and are unrelated to China directly. If China insists on intervening, it would be an instance of extraterritorial jurisdiction, a notion that the Trump administration is particularly sensitive to.
Tang Jingyuan expressed confidence that Li Ka-shing will likely withstand the pressure and continue with the transaction. If the Trump administration provides a certain degree of support to Li Ka-shing, it could deter China from overstepping its boundaries.
Sam Pap suggested that while China may aim to halt Li Ka-shing from selling the port operating rights, the difficulty of doing so is considerable. He opined that if China’s grandstanding deters Li Ka-shing from proceeding with the deal, the U.S. may view CK Hutchison as a Chinese proxy complying with Beijing’s directives, adversely impacting the conglomerate’s global port operations.
Sam Pap also proposed that Li Ka-shing may be employing a delaying tactic by temporarily halting the transaction but not outright cancelling it. This approach would help minimize the impact and facilitate separate negotiations with the U.S. and China to pursue the best possible solution.
Regarding Beijing’s desire to retain the two ports, Liu Zhaojia, an advisor to the Hong Kong Association for National Security Studies, remains cautious. He believes that under pressure from the U.S., the Panamanian government may revoke the port operating rights granted to CK Hutchison’s subsidiary. The concession was set to last until 2047, but currently faces review and auditing processes by the U.S. government and Panamanian authorities.
In a recent interview with NBC News, President Trump expressed the U.S.’ interest in fully acquiring Greenland, emphasizing its strategic importance for national security and not ruling out the use of force. Tang Jingyuan pointed out that, compared to Greenland, the two ports at the Panama Canal hold greater strategic significance for the U.S. Trump’s approach indicates a subtle indication of his intentions towards the Panama Canal, suggesting a decisive approach.
Regarding whether the Panamanian government would be compelled to enforce the port transaction due to U.S. pressure, international legal scholar and Deputy Executive Director of Taiwan’s Constitutional Foundation, Song Cheng’en, discussed uncertainties surrounding the port operating rights. Each port has its unique historical factors, and the extent of CK Hutchison’s rights or specific contracts in Panama is ambiguous.
However, Song Cheng’en affirmed the existence of U.S. pressure on the Panamanian government. If China obstructs the deal, prompting Li Ka-shing to voluntarily cancel or fail to sign, the U.S. might continue pressuring Panama to reclaim the operating rights. Commercial negotiations failing, the U.S. could resort to other means.
“Master Shen” emphasized that since the port’s sovereignty resides with Panama, the Panamanian government could seek legal grounds to suspend the agreement.
“Li Ka-shing could file a lawsuit against the Panamanian government; ultimately, it could come to that, but it would be more of a show to depict his company as unfortunate and victimized, potentially appeasing China,” “Master Shen” stated.
“Master Shen” expressed that in the eyes of the Chinese authorities, Li Ka-shing has become a national traitor colluding with foreign powers. Transforming his image from a traitor to a victim could aid the company’s survival, despite the underlying essence being unchanged—ultimately selling the port.