On the 27th, Bloomberg News reported that Chinese authorities have instructed state-owned enterprises to halt new business transactions with the Li Ka-shing family, the Hong Kong tycoon family that agreed to sell the operating rights of two Panama Canal ports to a BlackRock consortium.
Bloomberg, citing multiple sources familiar with the matter, reported that last week, senior Chinese officials ordered state-owned enterprises to suspend new cooperation with companies affiliated with the Li Ka-shing family. However, previously ongoing businesses will not be affected.
Accordingly, state-owned enterprises will no longer be able to approve new business ventures related to Li Ka-shing family companies such as CK Hutchison Holdings, CK Asset Holdings, Horizons Ventures, and Pacific Century Group.
Additionally, sources added that authorities are reviewing the scope of business transactions by examining the investments the Li Ka-shing family has made both in China and overseas.
Bloomberg explained that this directive does not necessarily mean the Chinese government is banning cooperation between state-owned enterprises and Li Ka-shing family companies, but it indicates increasing pressure on Li Ka-shing related to CK Hutchison’s Panama port sale.
However, Bloomberg noted that since the proportion of business revenue from mainland China and Hong Kong is small for CK Hutchison and investment firm Horizons Ventures, the impact of this measure on the Li Ka-shing family may be limited. The previous day, Bloomberg reported that CK Hutchison and the BlackRock consortium are proceeding with the deal aiming to sign by April 2 as originally planned.
Amid pressure from U.S. President Donald Trump to regain control of the Panama Canal, CK Hutchison, the flagship company of the Li Ka-shing Cheung Kong (CK·長江) Group founder family, entered into exclusive negotiations on the 4th to sell assets including a 90% stake in the Panama Canal port operator and stakes in 43 port businesses across 23 countries worldwide, excluding China and Hong Kong, to the BlackRock consortium.
Chinese authorities have not issued an official statement on this matter. However, on the 21st, the Chinese state media Hong Kong Ta Kung Pao (大公報) commented that the deal raises concerns about violating Hong Kong laws protecting national sovereignty, security, and development interests, urging parties to withdraw from the transaction. Reports also emerged that authorities instructed the anti-monopoly agency, the State Administration for Market Regulation (SAMR), to investigate whether there are any security breaches or anti-monopoly law violations in CK Hutchison’s overseas port business sale.
The Wall Street Journal (WSJ) reported that the Chinese leadership initially intended to use the Panama port issue as a bargaining chip in negotiations with the Trump administration, but Chinese President Xi Jinping became furious after CK Hutchison announced the sale.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
