WASHINGTON —
Last week, BlackRock, an American asset management giant, led a deal with Cheung Kong Hutchison Holdings, owned by Hong Kong’s richest man, Li Ka-shing, to acquire 43 ports in 23 countries around the world, including the ports of Balboa and Cristóbal at both ends of the Panama Canal. The deal was made after US President Donald Trump repeatedly said that China’s influence on the management of the Panama Canal was worrying.
Experts believe that the conclusion of this large-scale transaction will alleviate the United States’ concerns about China to a certain extent, and it is also a victory for the “America First” foreign policy of the Trump administration. The impact of this transaction is also likely to reshape the global maritime infrastructure and trigger a huge change in the competition between the United States and China. At the same time, it also shows that the Trump administration will continue to mobilize and cooperate with private enterprises to solve certain thorny geopolitical issues.
Li Ka-shing responded quickly to the changing situation. Will the “America First” policy win?
“My administration will take back the Panama Canal, and we have already begun to do so.” On March 4, President Trump spoke at his first joint session of Congress in his second term. On the same day, the American BlackRock Group announced the transaction with Cheung Kong Hutchison. The acquisition was also called “a victory for the United States” by President Trump. Previously, President Trump has repeatedly claimed that the Chinese government can control the Panama Canal through Li Ka-shing’s company.
Evan Ellis, professor of Latin American studies at the US Army War College, believes that this is Li Ka-shing’s quick response to the situation after seeing geopolitical changes.
“I think this represents a change in attitude on the part of CK Hutchison. The company recognized that the Trump administration was very focused on them being a company with ties to the Chinese government, and they changed their stance very quickly,” he told VOA by telephone.
Still, he said, CK Hutchison was not losing out on the deal. The $19 billion in cash it will receive from the deal is well above the $13 billion analysts estimated the port assets were worth.
Analysts at UBS said Hutchison Whampoa had a net debt level of $17.76 billion in June and the proceeds from the sale could put the conglomerate in a net cash position.
“The deal is a win for the administration’s Latin American policy and Secretary of State Marco Rubio’s ‘America First’ foreign policy,” the article reads. “For now, it should ease concerns that China’s presence in Latin America through Hong Kong-based Cheung Kong Hutchison poses a security risk to the United States.”
Rubio’s first visit after taking office as Secretary of State was to Panama and four other Latin American countries. Panama was the focus of his visit. After Rubio’s visit, the Panamanian government, which was once an important partner of China in promoting the “Belt and Road” in Latin America, decided to withdraw from the initiative.
Ellis of the U.S. Army War College said that severing ties with China also paves the way for these ports to receive more capital injections. “People think that this deal means that the new shareholders will increase investment. One, BlackRock has more funds, and two, these ports have removed the sensitivity of the China factor,” he told VOA.
US concerns cannot be completely eliminated
The Panama Canal has been open to navigation since 1914. As an important waterway connecting the Atlantic and Pacific Oceans, it has long occupied a pivotal position in the global economy and military fields.
Through the canal, ships do not have to pass through the southernmost tip of South America, saving voyage distance and time, thereby reducing transportation costs.
About 13,000 ships pass through the 51-mile-long canal each year, accounting for 5% to 6% of global trade.
The United States is the largest user of the Panama Canal , with the total volume of U.S. merchandise exports and imports in containers accounting for about 73% of the Panama Canal’s traffic. Every year, 40% of the United States’ container traffic passes through the Panama Canal, with a total annual cargo volume of up to $270 billion.
In 2017, Panama severed diplomatic relations with Taiwan and recognized that Taiwan is part of China, paving the way for China to invest in and bid for major infrastructure projects in the region. Nearly 40 Chinese companies have set up operations in Panama, covering a variety of fields such as mining, finance, logistics and telecommunications. Panama has also joined China’s “Belt and Road” initiative.
The Center for Strategic and International Studies (CSIS), a Washington think tank, said in a 2021 report that Beijing’s “growing presence in and around the canal has made the waterway a flashpoint in the Sino-U.S. scramble for spheres of influence.”
President Trump has long been unhappy with the canal’s fees for U.S. ships, saying they are too high. At the same time, he believes China can threaten U.S. interests in the region by exerting influence over the canal’s management through CK Hutchison, which operates two ports on the Panama Canal.
Leland Lazarus, deputy director for national security affairs at Florida International University’s Institute for Public Policy, told VOA that the concern is that if a conflict breaks out between China and the United States in the Taiwan Strait or the South China Sea and the U.S. Navy needs to quickly move ships from the Atlantic to the Pacific through the Panama Canal, Chinese companies could delay those operations.
“All major Chinese shipping and port management companies are inevitably influenced by the Chinese Communist Party, with several general managers and chairmen being members of the CCP. China’s 2017 National Security Law requires Chinese companies to support China’s national security interests. This means the CCP can influence the actions of Chinese port management and shipping companies to serve national interests,” he said.
However, Professor Ellis of the U.S. Army War College warned that while the deal moves things in a positive direction, it cannot be said that security concerns have completely disappeared.
“Right now, the industry standard cranes used are those from Zhenhua Heavy Industries. When you scan using a crane made in China, where does the data go? Where does the data from the chip on the container go?” Ellis asked.
In a report released last September, the Chairmen of the House Select Committee on China, the Homeland Security Committee, and the Transportation and Maritime Security Subcommittee pointed out that China’s state-owned Shanghai Zhenhua Heavy Industries dominates the global market share of port cranes and currently accounts for nearly 80% of the ship-to-shore crane business in US ports.
“The evidence collected during our joint investigation suggests that ZPMC could, if so inclined, serve as a Trojan Horse to help the Chinese Communist Party and the People’s Republic of China military exploit and manipulate U.S. maritime equipment and technology. This vulnerability to our critical infrastructure has the potential to affect Americans from coast to coast,” the report said.
It is not clear whether BlackRock will replace the equipment at these ports once it takes over. Some US media also reported that, strictly speaking, BlackRock is a “global company” rather than an “American company.”
Ellis noted that Chinese logistics giant CASCO Signal Co., Ltd. remains one of the main operators of the Panama Canal and maintains close ties with the Panama Canal Authority, numerous other Chinese entities operating in Panama, and the Panamanian government. These complex relationships may allow the Beijing authorities to exert influence on the Panamanian authorities at important moments.
CASCO Signal Co., Ltd. is a Chinese state-owned enterprise affiliated to CRRC Corporation Limited.
China’s influence in Panama and Latin America more broadly
In addition to the two important ports in Panama, the transaction involves 43 ports around the world except China and Hong Kong. This transaction means that Chinese companies have lost about 1/3 of overseas ports, and these maritime ports are controlled by American companies.
After World War II, the United States was once the world’s only maritime superpower, with world-class port management and shipbuilding. However, over the past 40 years, American companies have gradually withdrawn from global shipping and port operations and turned to seek higher financial returns further up the value chain.
In contrast, the Chinese government has been using its industrial policy to encourage Chinese companies to invest in shipping. According to an analysis by the S. Rajaratnam School of International Studies (RSIS) in Singapore, by 2022, Chinese companies owned or operated terminals in 61 of the world’s top 100 container ports. After 25 years of industrial policy, Chinese companies have captured similarly large market shares in shipping, shipbuilding, containers, and port equipment.
The Chinese government has not yet made a statement on the transaction, but the website of the Hong Kong and Macau Affairs Office of the State Council of China reprinted a commentary on Thursday (March 13), describing the transaction as not an “ordinary business behavior” and calling on “the relevant companies to think twice in the face of such a major event.”
China is a major user of the Panama Canal. From October 2023 to September 2024, China accounted for 21.4% of the Panama Canal’s cargo traffic, second only to the United States.
RSIS’s analysis points out that there has been controversy over the relevance of corporate control over ports to state power.
“The ownership and operation of ports raises major strategic issues,” the analysis said. “The geo-economic advantages of port management are considerable.”
“Given the sums of capital involved and the criticality of ports to economic success, these strategic investments give foreign governments economic and political influence. Port operators may be able to favor certain shippers, giving them priority and privileged access to critical supply chains,” the article reads.
The RSIS analysis said the BlackRock deal was too large, too high-profile and too geo-economically salient to transcend politics.
In China, some people are worried that after American companies take over the Panama Canal, China may face increased shipping costs due to delays in security checks, increased insurance and anchorage fees, and changes in shipping routes. In addition, Chinese cargo ships passing through may also have data security risks. They suggest that the Chinese government find long-term security alternatives.
The role of American private companies in geopolitics
In addition to the two important ports in Panama, the transaction involves 43 ports around the world, excluding China and Hong Kong. They are not only logistics and transportation hubs, they are also key nodes in the global trade flow.
Ellis of the US War College believes that the Trump administration advocates “America First”, under which private enterprises often play an important role in diplomatic and political decision-making. As one of the world’s largest asset management companies, BlackRock’s acquisition of ports involved in key international trade routes may actually provide indirect leverage for the US government’s influence on global supply chains and strategic routes.
“This transaction also reminds us that America’s private assets can be an effective alternative to China’s (Belt and Road) assets and play an important role in other parts of the world,” he told VOA.
Given that Trump publicly congratulated the “large American company” and expressed hope that they would also buy “several other canals,” analysis at the S. Rajaratnam School of International Studies in Singapore suggests that his government is cultivating the impression that they facilitated the deal and will continue to channel private capital into key infrastructure deals.
Governments and the shipping and trade industries will now be watching this space closely. The deal is still being finalized and could even fall through. The deal will have to be ratified by the Panamanian government.