China's Negotiation Card with U.S. Appears to Have Failed
Contract Target: Consortium Led by BlackRock
Main Contract Scheduled for April 2
Panoramic view of Balboa Port located at the Pacific entrance of the Panama Canal on the 4th. It is owned by Hutchison Port Holdings, a subsidiary of CK Hutchison Holdings headquartered in Hong Kong. / Photo by Reuters and Yonhap News Agency
Hong Kong-based CK Hutchison Holdings' decision to sell the operating rights of the Panama Canal ports to a consortium led by the U.S. company BlackRock has enraged Chinese President Xi Jinping, the U.S. daily The Wall Street Journal (WSJ) reported on the 18th (local time).
WSJ explained that part of the reason for Xi Jinping's anger was that CK Hutchison did not seek Beijing's approval before the sale. The Xi leadership had initially planned to use the Panama port issue as a bargaining chip in negotiations with the Trump administration, but this plan was thwarted by the announcement of the sale.
Bloomberg News reported on the 17th that Chinese authorities had instructed the State Administration for Market Regulation (SAMR), an antitrust agency, to investigate whether there were any security violations or antitrust law breaches in CK Hutchison's overseas port business sale.
Last week, Chinese authorities criticized the sale through a commentary in the state-run Hong Kong Ta Kung Pao, using strong language such as "disregarding national interests and the greater good of the nation, betraying and selling out all Chinese people," and "hegemonic acts by the U.S. through despicable means such as threats, pressure, and inducements to plunder the legitimate rights and interests of other countries."
The U.S. and China have been engaged in a power struggle over the operating rights of the Panama Canal ports. Since the end of last year, U.S. President Donald Trump has strongly argued that the U.S. should regain control of the Panama Canal's operating rights. The Trump administration boasts that this sale transaction represents a U.S. victory in the global influence competition between the U.S. and China.
On the 4th, CK Hutchison announced that it would sell a 90% stake in the Panama Canal port operating company, along with stakes in 43 port business sectors across 23 countries worldwide excluding China and Hong Kong, to the BlackRock consortium. The transaction is valued at $22.8 billion (approximately 33.2 trillion KRW). The main contract signing is scheduled for April 2. For the sale to be finalized, approvals from CK Hutchison shareholders and the Panamanian government are required.
The Panama Canal, completed in 1914, was managed by the U.S. until 1999 when control was handed over to Panama. The Panamanian government entrusted the operation rights of the two ports at both ends of the canal to Hutchison Whampoa (now CK Hutchison), headquartered in Hong Kong, through competitive bidding in the 1990s.
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