Panama's Supreme Court recently canceled a contract held by CK Hutchison Holdings to operate two ports near the Panama Canal, citing alleged "unconstitutionality." In response, international media have observed a notable escalation in China's rhetoric, with expectations of retaliatory measures.
According to a Bloomberg report on February 5, China is enacting broad countermeasures against Panama's decision. Authorities have instructed state-owned enterprises to suspend negotiations on new projects with Panama and are concurrently evaluating further actions in trade and shipping sectors.
Informed sources revealed that the suspension of new project talks could potentially block billions of dollars in future investments. Current infrastructure projects undertaken by Chinese state-owned enterprises in Panama include the $1.4 billion fourth bridge over the Panama Canal, the Amador cruise ship terminal constructed by China Harbour Engineering Company, and a section of a metro line built by China Railway Tunnel Group.
Additionally, China has advised shipping companies to consider rerouting cargo through alternative ports, provided it does not significantly increase costs. Chinese customs authorities have also intensified inspections on imports from Panama, particularly agricultural products such as bananas and coffee. Some ongoing projects may also be affected, though final directives have not yet been issued.
At a regular press conference on February 5, Chinese Foreign Ministry spokesperson Lin Jian reiterated China’s clear stance regarding the port issues in Panama.
Earlier, on February 2, China’s Foreign Ministry stated that the court ruling contradicted Panamanian laws that had originally approved the relevant concessions and emphasized that affected companies reserved all rights, including legal recourse. The ministry vowed to take all necessary measures to safeguard the legitimate rights and interests of Chinese enterprises.
By February 3, the Hong Kong and Macao Affairs Office of the State Council issued a strongly worded statement, condemning Panama’s decision as "utterly absurd" and accusing Panama of "submitting to hegemony and abetting wrongdoing." The office urged Panama to "recognize the situation and correct its course," warning that persistence would lead to severe political and economic consequences.
Analysts noted that the tone of the Hong Kong and Macao Affairs Office marked a significant escalation compared to initial responses.
Meanwhile, CK Hutchison, which has operated the two ports since 1997, announced on February 4 that its subsidiary, Panama Ports Company (PPC), had initiated arbitration following the Supreme Court’s ruling. The company stated that Panama’s actions had caused "serious and imminent losses" and indicated it would seek extensive compensation.
CNN reported on February 5 that China holds considerable economic leverage over Panama. According to United Nations data up to 2024, China surpassed the United States as Panama’s largest trading partner in 2019.
Analysts suggest China may be considering a range of responses, including trade and investment measures, and could potentially coordinate similar actions with other countries in the region.
U.S. policies in Latin America have reportedly placed pressure on China but also created opportunities. Chinese officials have characterized certain U.S. actions, particularly those involving Venezuelan President Nicolás Maduro, as imperialist and bullying.
Policy researchers believe that while U.S. strategies may increase short-term pressure on China in the region, in the long term, they could encourage more Latin American countries to strengthen cooperation with China.
Bloomberg also noted that China’s current countermeasures align with actions taken last year. In March 2023, CK Hutchison announced the sale of 43 ports, including the two in Panama, to an investor consortium led by BlackRock, the world’s largest asset manager, in a deal valued at $22.8 billion. At the time, Chinese authorities criticized the transaction as "succumbing to U.S. pressure" and initiated a regulatory review.
Subsequently, CK Hutchison invited COSCO Shipping Group to join the investor consortium. Sources indicated that adjustments were being considered to advance negotiations, such as splitting assets into separate ownership structures. Such arrangements could allow COSCO to acquire larger stakes in ports located in regions more favorable to China, such as Africa.
If finalized, the deal could generate over $19 billion in cash for CK Hutchison, though analysts caution that the valuation and actual returns may be lower than initially expected following the Panaman court’s ruling.
When asked about future steps, Foreign Ministry spokesperson Lin Jian referred to previous statements and emphasized the Chinese government’s firm commitment to protecting the legitimate rights and interests of Chinese enterprises.