Chinese officials have threatened to block a massive £18 billion port acquisition by BlackRock which would see the Panama canal, currently owned by Hong Kong-based CK Hutchinson, go into American hands, the Wall Street Journal reports.
The acquisition, in which the American investment giant would purchase a controlling stake in 43 ports around the world, has been months in the making: it was first announced in March, just a few months after President Trump took office. Reclaiming the Panama canal in the interests of national security had been an important part of Trump’s campaign; the current administration was reportedly consulted about the acquisition before it was made public.
The sale drew criticism from both Panama’s government – who rejected US claims that it would “take back” the canal, as President Trump said in the State of the Union address in March. China, on its part, has criticised the deal, which would lessen Chinese control over the crucial shipping channel. In April, Chinese officials said they would need to review any documents involved in the sale for antitrust issues, and obliquely accused the US of “economic coercion, hegemony, and bullying”.
Now, officials are reportedly threatening to block the sale unless Cosco, a Chinese shipping company, can have some control over the Panama ports. BlackRock and Mediterranean Shipping Company (MSC), the Italian container shipping giant and the sale’s biggest investor, are both reportedly open to Cosco’s participation in the deal. However, the level of control that Cosco would have would in all likelihood be less than CK Hutchinson’s 80% stake in the ports, meaning Chinese influence in the region would likely still be reduced.
The Panama canal is a crucial shipping route, connecting the Atlantic and Pacific oceans and seeing 5% of world trade pass through its 300 meter wide strait. The canal itself is owned and run by the Panama Canal Authority, a government body; the dispute centers on two ports on either end, Cristobal and Balboa, which effectively function as chokepoints and key logistical hubs.
As global trade, especially around the North American continent, is becoming increasingly uncertain, an abrupt stop to a long-planned deal could disrupt markets and increase perceived risks in shipping routes. If the deal were to gain Chinese support and go ahead, however, it could bring much-needed investment to the ports and perhaps bolster US-China relations, which have in the past months been fraught due to tariffs.
