CK Hutchison Holdings’ sale of its 90% interest in the Panama Ports Company, including two crucial Panama Canal ports, could be on hold, according to sources close to the Hong Kong-based firm.
The BlackRock-led consortium was said to have agreed essential terms with CK and Hutchison Port Holdings, with a signing expected on or before 2 April.
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But local reports from the South China Morning Post suggest that date was never set in stone and “there will not be an official signing of the two Panama ports deal next week.”
Although the reporting indicated that CK Hutchison did not see 2 April as a “real deadline”, the delay has sparked speculation that Hong Kong-based CK has given way to Chinese pressure to ditch the deal.
On March 27, a day before the delay was revealed, the Chinese government instructed its state-owned companies to stop business with Li Ka-shing’s CK Hutchison and his family’s portfolio of companies.
Beijing’s regulators have reportedly been looking closely at the deal, which is understood to have caused unrest with senior officials in President Xi’s government.
China’s Hong Kong and Macau Affairs Office has also republished criticism of the deal from Hong Kong’s pro-Beijing newspaper Ta Kung Pao, indicating that Beijing’s wish is not just a delay but a cancellation of the as-yet unsigned acquisition.
The Panama Canal has quickly become a proxy for the escalating trade war between China and the US, pushed by the Trump Administration. Washington’s current view is not just of the Canal as a key geopolitical trade gateway, but as a key asset that should be controlled by the US.
In his first term, Trump frequently spoke of his disdain for China, but in his second he has started to transform that belief into policy action in a much swifter and more dramatic fashion. This includes tit-for-tat tariff escalation on Chinese goods and parts entering the US, and even talk of huge charges for Chinese ships making calls at US ports.
Beijing is, unsurprisingly, taking a dim view of the protectionist policies.
Playing Geopolitics
The deal was politicised from the very beginning, as US President Trump declared it a sign of his policy aims in fruition. “My administration will be reclaiming the Panama Canal, and we’ve already started doing it,” he said, referring to the initial reports of the deal.
Panamanian President Jose Raul Mulino responded by saying, “[Donald Trump is] once again lying.”
“The Panama Canal is not in the process of being reclaimed … the Canal is Panamanian and will continue to be Panamanian,” he clarified.
The Panama Canal is owned and operated by the Panama Canal Authority, which is an autonomous body created by the Political Constitution of the Republic of Panama.
Although the ports of Balboa and Cristobal are key strategic points at either end of the Canal, they are independently owned and operated.
The CK Hutchison and BlackRock-TiL deal did not only sell the Panamanian ports, but a total of 43 ports comprising 199 berths in 23 countries, worth $22.8bn.
BlackRock-TiL has been approached for comment.
