China Opposes US$22.8Bn Panama Ports Deal, Calls it an Act of Hegemony
The recent US$22.8 billion deal granting the BlackRock-MSC consortium control over Hutchison Port Holdings’ stake in Panama Ports Co has sparked controversy and geopolitical tensions between the US and China. Describing the agreement as an act of hegemony, Beijing has expressed concerns over the deal’s potential impact on China’s Belt and Road Initiative and Hong Kong’s global shipping and trade hub status.
In an opinion piece published by the Chinese state-owned Ta Kung Pao newspaper, Beijing accused the US of using its national power to infringe upon the legitimate rights and interests of other nations. The article, later reposted on the website of China’s Hong Kong and Macao Affairs Office, urged the involved companies to carefully consider the nature of the issue before proceeding with the deal.
Drewry senior manager for container research, Simon Heaney, commented on the situation, stating that the Panama ports sale is part of a broader geopolitical chess game currently unfolding. He highlighted the need for the deal to clear multiple competition hurdles worldwide, especially with the Chinese government expressing opposition to the agreement.
The deal, which involves the transfer of control over 43 ports across 23 countries, follows Donald Trump’s statements regarding China’s influence over the Panama Canal. Trump’s remarks on “reclaiming” control over the canal have further escalated tensions between the two countries. CK Hutchison co-managing director, Frank Sixt, emphasized that the transaction resulted from a competitive process involving numerous bids and expressions of interest.
Despite accounting for just 9% of CK Hutchison Holdings’ total revenue, the ports business has been a strong cash generator for the conglomerate. With an impressive 35% EBITDA margin, the segment has outperformed CK Hutchison’s overall margin of 23%. The deal’s success remains uncertain, with potential challenges ahead due to the geopolitical implications and competition hurdles involved.