Panama Court Voids Chinese Firm's Canal Port Contracts

$22.8 billion. That's how much CK Hutchison was set to receive from selling its global port operations to a BlackRock-led consortium. Now that deal hangs in the balance after Panama's Supreme Court delivered a stunning blow to the Hong Kong-based giant.

The court ruled Thursday that laws allowing CK Hutchison's subsidiary, Panama Ports Company (PPC), to operate two key container ports on the Panama Canal were "unconstitutional." The decision effectively boots out a company that's been running the Balboa and Cristobal ports since the 1990s—and hands Donald Trump a major geopolitical victory.

Trump's Canal Claims Come True

The timing couldn't be more symbolic. Just over a year ago, Trump declared in his inaugural address that "China is operating the Panama Canal" and vowed to "take it back." Secretary of State Marco Rubio doubled down last month, demanding Panama make "immediate changes" to what he called Chinese "influence and control" over the waterway.

Panama had consistently rejected these claims, with President José Raúl Mulino insisting the canal "is and will remain" in Panamanian hands. But Thursday's ruling suggests the pressure campaign worked.

CK Hutchison, founded by Hong Kong billionaire Li Ka-shing, isn't technically Chinese government-owned. However, its Hong Kong base means it operates under Chinese financial laws—a distinction that matters less in today's geopolitical climate than it might have a decade ago.

The Real Stakes: Global Trade Routes

This isn't just about two ports. The Panama Canal handles 5% of global maritime trade, with up to 14,000 ships transiting its 51-mile length annually. China accounts for 21.4% of cargo volume through the canal—second only to the United States.

Control over such chokepoints has become a flashpoint in US-China rivalry. Beijing's Belt and Road Initiative has given Chinese companies significant stakes in ports worldwide, from Piraeus in Greece to Hambantota in Sri Lanka. Washington views this as a strategic threat, potentially allowing China to disrupt global supply chains during a crisis.

PPC fired back at the ruling, calling it legally baseless and warning it "jeopardizes not only PPC and its contract, but also the well-being and stability of thousands of Panamanian families." The company has invested over $1.8 billion in infrastructure since 1997.

Ripple Effects Across Global Finance

The court decision could derail CK Hutchison's planned $22.8 billion sale to the BlackRock-MSC consortium. Trump had previously hailed that deal as a win for American interests, while Beijing criticized it as contrary to national interests.

China's foreign ministry responded predictably, with spokesperson Guo Jiakun vowing to take "all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies." Hong Kong's government also "firmly rejected" the ruling.

For investors, the Panama decision raises uncomfortable questions about the stability of Chinese overseas investments. If a Hong Kong company can lose port rights in Panama due to geopolitical pressure, what about Chinese investments in other strategically sensitive sectors?

The New Infrastructure Politics

This case illustrates how infrastructure has become weaponized in great power competition. Ports, cables, pipelines—once viewed as purely commercial assets—are now seen through security lenses. The US has pushed allies to exclude Chinese companies from 5G networks, submarine cables, and now port operations.

Panama's decision likely reflects both US pressure and domestic political calculations. The country benefits enormously from canal revenues but also depends on good relations with Washington. Choosing sides may have seemed impossible until it became unavoidable.