HONG KONG – The Hong Kong-based conglomerate has agreed to sell two Panama Canal port stakes to US and Swiss investors amid pressure on port ties from the Trump administration with China.
CK Hutchison, a conglomerate founded by Hong Kong billionaire Li Ka-shing, agreed, in principle, to sell control stakes in units that operate the two ports in a consortium, including US asset manager BlackRock.
President Donald Trump had argued that the Chinese-backed ports at the Pacific and Atlantic entrances of the canal pose a national security threat as they gave China’s military potential over the strategically important canal.
CK Hutchison said the proposed sales were unrelated to politics, but Trump touted it as his victory in a joint session of Congress on Tuesday night.
“My administration has reclaimed the Panama Canal and has already begun it,” he said. “Today, the American companies announced that they would purchase both ports around the Panama Canal.”
Approximately 15,000 ships from around the world pass through the Panama Canal every year. It was built primarily with US funding and was completed in 1914.
In 1999, the United States waived control of the canal over Panama under a treaty negotiated by President Jimmy Carter and ratified by the Senate in 1978, and the United States maintained its lasting right to protect the canal from any threat to its neutrality.
Trump claims without evidence that China controls the Panama Canal. He said he would consider using military force to seize it from Panama, one of Washington’s closest allies in Latin America.
“We didn’t give it to China,” Trump told Congress Tuesday. “We handed it to Panama and we’ll get it back.”
China and Panama have denied foreign interference in the 50-mile canal, which is neutral to Panama’s constitution.
“China is committed to supporting Panama’s sovereignty over the canal and maintaining its position as a permanent, neutral international waterway,” China’s Foreign Ministry spokesman Lin Jiang said during a regular briefing in Beijing on Wednesday.
“China has never been involved in the management or operation of the canal, and has not interfered with it,” he said.
The Trump administration and members of the Congress were briefed on the proposed $22.8 billion deal.
The consortium, which also includes a Geneva-based Mediterranean shipping company, manages 80% profits at Hutchison Port, a subsidiary of CK Hutchison, which operates 43 ports in 23 countries. They also receive 90% of the Port of Panama, which operates the Port of Balboa on the Pacific side of the canal and Cristobal on the Atlantic.
It will not affect the ports of Chinese companies.
“I would like to emphasize that this transaction is purely commercial in nature and has absolutely nothing to do with recent political news reports on the Port of Panama,” Frank Six, co-management director at CK Hutchison, said in a news release.
The news was that CK Hutchison rose almost 22% on Hong Kong’s Hangsen index on Wednesday.
Control of the Panama Canal is a prominent focus of the Trump administration, with Marco Rubio making Panama part of his first foreign trip as Secretary of State.
Hutchison Ports acquired the right to control two Panama Canal Ports in a bidding process that was described as fair and non-discriminatory by the then-U.S. authorities in 1997. In 2021, the contract was extended until 2047.
The two ports are located at both ends of the Panama Canal, but ships do not have to pass and enter them. Other ports along the canal are operated by companies in Taiwan, Singapore and the US
The port mainly serves to handle cargo, and the canal itself is operated by the Panama Canal Bureau, an independent Panama government agency.
CK Hutchison is a private company based in Hong Kong, a semi-autonomous Chinese territory, but officials in the Trump administration have argued that it is the subject of Beijing’s control.
Potential sales subject to regulatory approval were first reported by the Wall Street Journal.
