US-China Hegemony Clash Over Panama Canal... Hong Kong Tycoon in a Dilemma [AK Radio]

CK Hutchison Halts Panama Canal Port Sale
Business Spanning China and the West...
CK Caught Between Two Powers

Recently, amid intensifying hegemonic competition between the United States and China over the operation rights of Panama Canal ports, Hong Kong tycoon Li Ka-shing has found himself in a difficult situation under pressure from both countries. The CK Hutchison Group, led by Li Ka-shing, attempted to sell the operation rights of two Panama Canal ports to the American investment firm BlackRock, but the deal was put on hold at the final contract stage due to strong pressure from the Chinese government. This case is attracting attention as it reveals a facet of the fierce competition between the U.S. and China over global maritime dominance, going beyond a simple business transaction.

On April 2, CK Hutchison had agreed to sell the operation rights of two Panama Canal port facilities to BlackRock and was only left with the final contract. However, the company suddenly declared a suspension of the contract, drawing worldwide attention. The company did not disclose specific reasons, but it is known that strong pressure from the Chinese government was behind this decision.

China’s market regulatory authority, the State Administration for Market Regulation, intervened before the contract was finalized, stating it would investigate whether the deal violated antitrust laws, effectively obstructing the contract process. Particularly, the pro-China Hong Kong media outlet "Hong Kong Ta Kung Pao" published a series of harsh critical articles targeting the Li Ka-shing family from mid-March, accusing them of "losing the greater cause for money and betraying the motherland, the nation, and all Chinese people."

This strong pressure from Chinese authorities on a Hong Kong businessperson is highly unusual, and it is rumored that President Xi Jinping was greatly angered when the Panama Canal port sale was reported to him. Interestingly, Li Ka-shing did not initially pursue the sale voluntarily but was compelled to proceed with the contract under pressure from the U.S. government. Now 97 years old, Li Ka-shing remains silent amid the pressures from both the U.S. and China.

Li Ka-shing CK Hutchison Chairman. Photo by AP Yonhap News

The reason Li Ka-shing and the CK Hutchison Group have no choice but to tread carefully between the U.S. and China lies in the group’s business structure. CK Hutchison is a large conglomerate operating in various sectors including shipping and ports, telecommunications, infrastructure, and consumer goods, with a presence in multiple countries. The group combines the Cheung Kong Group, one of the largest companies Li Ka-shing established in Hong Kong, and Hutchison Whampoa, a British port company acquired in 2015. Unlike companies that grew organically in mainland China, CK Hutchison has maintained close ties with Western countries as well.

Li Ka-shing himself is originally from mainland China but currently holds dual citizenship of Hong Kong and Canada. He is known to have maintained a strained relationship with the Xi Jinping regime, having expressed opposition to the Hong Kong National Security Law passed in 2019. CK Hutchison’s headquarters is listed on the Hong Kong Stock Exchange, and subsidiaries under the Cheung Kong Group are based in mainland China. Meanwhile, its shipping, telecom, and infrastructure businesses have significant operations in the UK, the Netherlands, and Southeast Asian countries, making it difficult to lean toward either side exclusively.

The sharp confrontation between the U.S. and China over the operation rights of Panama Canal ports stems from their strategic value. The Trump administration has declared its intention to regain full control over the Panama Canal. The U.S. fears that if China gains control over the canal in an emergency, the military forces stationed on the U.S. East Coast would be unable to quickly move to the Asia region. Currently, the Panama Canal is most frequently used by the U.S. and its military, often utilized when the Atlantic and Pacific fleets rotate missions or change operational areas. The Trump administration argues that since naval movements serve global peace, the Panama government should not collect toll fees.

On the other hand, the Chinese government worries that if the U.S. completely controls the Panama Canal, it will gradually lose the ports it has leased worldwide as part of the Belt and Road Initiative. There is concern that China’s trade routes could be blocked if this situation continues. Especially if the U.S. government attempts to purchase not only the Panama Canal ports but also all port operation rights owned by the Chinese government or companies worldwide, China’s trade routes could be seriously threatened.

Cargo being transported at the Panama City trade port, where the Panama Canal is located. Photo by AP Yonhap News

Despite the current tension, there is a growing perception that neither the U.S. nor China will achieve favorable outcomes as time passes. While a pride battle may occur as the Trump administration newly takes office and confronts the Xi Jinping government for the first time, it seems inevitable that someone will have to find a compromise.

The Chinese government’s dilemma is that while the Hong Kong authorities are trying to mediate a consensus between Li Ka-shing and BlackRock, strong intervention to cancel the contract could lead to foreign investment capital and investment banks leaving Hong Kong. Many companies have already left Hong Kong since the forced passage of the National Security Law in 2019, and if free business transactions and contracts are obstructed under orders from the central authorities, remaining companies may also turn away from Hong Kong. This would be a significant blow to China’s position, which is trying to establish a negotiation table with the Trump administration.

Meanwhile, the Trump administration also faces the burden that if it does not resolve tariff negotiations with China amid ongoing domestic inflation, U.S. prices will continue to rise. Additional tariffs were part of a strategy to extract more economic benefits from China, so if negotiations break down, there would be nothing to gain. Ultimately, although both sides appear to confront each other strongly on the surface, given their intertwined interests, it is highly likely they will seek to resolve issues through negotiations.