China Pressures Company Over Sale of Ports in Panama Canal

The Chinese government is pressuring a private Hong Kong company to cancel a multibillion-dollar deal, arguing that it poses geopolitical risks to Beijing. The regime’s market regulatory authority announced on Friday that it will review the Hong Kong conglomerate CK Hutchison Holdings’ agreement to sell dozens of global port assets—including two in the Panama Canal—to a consortium led by the U.S. investment firm BlackRock.

“We have taken note of this transaction and will review it in accordance with the law to ensure fair market competition and safeguard the public interest,” the State Administration for Market Regulation (SAMR) stated in response to inquiries from a state-run news agency. The agency did not provide further details.

Bryan Mercurio, a professor at the Chinese University of Hong Kong (CUHK) specializing in international economic law and bilateral trade agreements, had already suggested to Nikkei Asia—before the SAMR’s announcement—that China could take such an approach. He noted that the deal “could be legally more significant than it appears, as it may force the divestiture of assets acquired by third parties,” potentially leading to contract terminations with clients, partners, and suppliers.

Media attacks depicting the transaction as unpatriotic and against China’s interests persisted on Friday. The latest edition of Ta Kung Pao—a Beijing-controlled Hong Kong newspaper leading the campaign against the sale—published a story titled “Only by Crossing the River with the State Do Entrepreneurs Earn Respect.” The article cited several pro-Beijing figures, as well as purported “ordinary citizens,” who argued that safeguarding state security and interests should be the priority.

Regime endorsement 

Several Ta Kung Pao articles on the matter were republished in full by the official website of the Communist Party’s Hong Kong and Macau Affairs Bureau, signaling the government’s endorsement. On Wednesday and Thursday, the website reissued articles emphasizing that companies undermine their own foundations if they disregard national interests and must stand with the state against hegemony and intimidation.

CK Hutchison had been expected to sign “definitive documentation” with the BlackRock-led consortium by the following Wednesday. However, the South China Morning Post, an independent Hong Kong newspaper, reported late Friday that the paperwork would not be signed this week, with an anonymous source close to the conglomerate stating that Wednesday was not considered a “hard deadline.” The report added that this did not mean the deal was off, but that key details remained unresolved.

The mounting pressure has cast a shadow over CK Hutchison, all entities within Li Ka-shing’s business empire, and the broader Chinese business community. Bloomberg reported Thursday that Beijing authorities have instructed state-owned enterprises to halt new business dealings linked to the Hong Kong-based group.

When asked about this directive on Thursday evening, Xu Yugao, deputy secretary and in-house counsel for CNOOC—a Hong Kong-listed arm of one of China’s three major state-owned oil companies—told reporters and analysts that he and many others were “closely following” developments surrounding the deal.

Business concerns

At the same time, he maintained that business negotiations remained “extremely stable” without “external interference.” Xu was referring to a joint oil exploration project in the South China Sea with the former Husky Energy, which had been part of CK Hutchison before merging with the Canadian energy conglomerate Cenovus.

While Xu stated he was unsure whether his Canadian partner was still linked to Li Ka-shing, CK Hutchison’s disclosures indicate that it remains an investor in Cenovus.

Beyond the geopolitical implications of CK Hutchison’s sale of 43 ports across 23 countries—valued at $22.8 billion—experts say the deal has raised concerns in Beijing over “losing autonomy.” Reports suggest that Chinese President Xi Jinping was not informed before negotiations began, while former U.S. President Donald Trump was reportedly kept updated on the process by BlackRock CEO Larry Fink.

“The sale impacts the Belt and Road Initiative and weakens China’s influence in the U.S.’s backyard,” said Claus Soong, an analyst at the German think tank Merics. “Xi Jinping’s image as a strong leader is taking a hit—Trump now has something to boast about, while Xi wasn’t even consulted before the deal, and Beijing has little leverage to stop the process,” he added.

Louis-Vincent Gave, founding partner and CEO of Gavekal Research, shared a similar view. “Beijing has few, if any, legal options to sabotage the deal,” Gave said. However, if the sale proceeds, Li Ka-shing and his family’s business empire “could be perceived as having defied Beijing and gotten away with it.” He warned that such a scenario would be “an unusual loss of prestige for Xi Jinping, raising questions about future repercussions for the family and the group.”

Gave believes China is “reminding Hong Kong businesses that Beijing must have a say in major strategic decisions” and may still try to derail the deal not only by pressuring CK Hutchison but also by potentially exerting influence on BlackRock, which has business interests in China.

Neither CK Hutchison nor BlackRock immediately responded to Nikkei Asia’s requests for comment.

Domestic leverage

Mercurio, the CUHK professor, suggested that CK Hutchison could theoretically withdraw from the deal and compensate BlackRock through a termination clause. He argued that CK Hutchison “would have to react accordingly if China pulled internal economic levers,” given the company’s substantial commercial exposure in China, despite its diversification efforts over the years.

However, Mercurio noted that blocking the deal “would only reinforce Trump’s rhetoric that ‘China’ was tightening its grip on the Panama Canal.”

He also emphasized that if Hong Kong authorities intervened to block the transaction, “it would be an unprecedented move that could bolster claims by President Trump and others that Hong Kong’s trade, finance, and policies are not truly independent of the Chinese Communist Party regime.”

The CUHK analyst added that while the entire process may have limited implications for foreign businesses or specific sectors such as finance, “other Hong Kong conglomerates should take heed.”

Miao Jianmin, chairman of China Merchants Bank, acknowledged at an annual earnings briefing on Thursday that “it is difficult to avoid geopolitical influence” when conducting international business. Miao, who also chairs China Merchants Group—whose port operations unit plays a key role in Beijing’s overseas port asset acquisitions—said this is especially true in maritime affairs, transportation, and port operations.

He stressed that geopolitics is the “top consideration” for his group when expanding abroad and emphasized that “maintaining good communication with regulatory authorities to mitigate various risks” is equally critical.

Source: Valor Econômico

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