China has expressed strong opposition to a proposal for selling ports in the Panama Canal to American asset management firm BlackRock, denouncing the deal as “spineless groveling” and a “betrayal” of the Chinese people.
A commentary published by the state-owned Ta Kung Pao newspaper, later reposted by China’s Hong Kong and Macao Affairs Office, has led to a more than 6% drop in shares of CK Hutchison (CKH), the Hong Kong-based conglomerate that owns the ports.
Analysts suggest that the market’s reaction indicates investor concerns regarding the deal’s feasibility in the face of possible Chinese objections. Dan Baker, a senior equity analyst for Morningstar, remarked, “I’m not aware that any approval from Chinese regulators is required, given that CKH is retaining its existing Chinese ports. However, there is a possibility that external pressures could affect the deal.”
CK Hutchison announced last week that a group of investors led by BlackRock intends to spend $22.8 billion to acquire the ports of Balboa and Cristobal, located at either end of the canal. The consortium also plans to acquire CK Hutchison’s controlling interest in an additional 43 ports across 23 countries. The deal is still in the “agreement in principle” stage.
President Donald Trump has previously made headlines by stating his intention to “take back” the Panama Canal, which the US constructed in the early 20th century and transferred to Panama in 1999 under a controversial treaty. Trump has pointed to Chinese ownership of certain port operations as evidence of China’s influence over the canal.
When initially announced, the sale was seen as a strategic move for CK Hutchison to offload a politically sensitive asset while receiving a favorable price. The company indicated it expects to receive cash proceeds exceeding $19 billion from the sale, significantly above analysts’ valuations for the ports.
However, the critical commentary from Ta Kung Pao could complicate the transaction. It characterized CK Hutchison’s actions as “profit-seeking” and “disregarding national interests.” The article urged the company to reconsider its stance regarding this significant issue.
Despite Trump’s claims regarding Chinese control, the Panama Canal has continued to be operated by Panama since the 1999 handover, and the port operations are not under Chinese ownership.
The Panama Canal remains vital for international trade, handling about 4% of the world’s maritime trade and over 40% of US container traffic, making its management a key strategic interest for the US.
Credit: CNN
