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Newsweek

China Threatens Trump's Panama Canal Deal: Report

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. China has warned that it may block the sale of Hong Kong-based CK Hutchison's international ports, including one on either end of the Panama Canal, to a United States-linked consortium unless China's state-owned shipping giant, COSCO, is included in the agreement. The development has raised questions about the high-profile $22.8 billion deal, which U.S. President Donald Trump lauded as a foreign policy victory that would reduce Chinese influence over strategic global shipping lanes. Why It Matters CK Hutchison agreed in March to sell its 80 percent stake in 43 container ports across 23 countries to a consortium led by BlackRock and the Geneva-based Mediterranean Shipping Company. The deal, which still requires approval from Beijing, comes after Trump claimed, without offering evidence, that China controls the Panama Canal. China and Panama have rejected this, stressing that the canal remains under Panamanian management. Newsweek reached out to BlackRock and CK Hutchison via email for comment. Container ship COSCO Development is seen at the Agua Clara Locks in Colon, 56 miles from Panama City, on May 2, 2017. Container ship COSCO Development is seen at the Agua Clara Locks in Colon, 56 miles from Panama City, on May 2, 2017. Rodrigo Arangua/AFP via Getty Images What To Know Negotiations over the purchase between BlackRock, Mediterranean Shipping Company (MSC), and CK Hutchison are facing mounting pressure as Chinese officials insist that COSCO, a major state-owned Chinese shipping company, be included in the agreement as an equal partner and shareholder. Otherwise, Beijing is prepared to block the transaction, according to people familiar with the talks cited by The Wall Street Journal. Chinese state media has criticized the deal, labeling it a "hegemonic act" by the United States designed to limit China's national interests under the pretense of trade. Chinese authorities launched an antitrust investigation into the sale and ordered state-owned enterprises to pause any new business dealings linked to CK Hutchison founder Li Ka-shing and his family. Officials in Panama confirmed an audit of Hutchison's concessions was ongoing. What People Are Saying Trade expert Henry Gao, a professor at Singapore Management University, told Newsweek of China's reported ultimatum: "I think it's primarily driven by political and strategic considerations. "It won't sit well with the Trump administration, which has been trying to push China out of Latin America, long seen by the U.S. as its own backyard. That said, if bilateral trade negotiations make good progress, the U.S. might be willing to resolve the issue in a more amicable way." Chinese Foreign Ministry spokesperson Lin Jian told reporters Friday: "Regarding the sale of overseas port assets by Changhe, China's State Administration for Market Regulation has stated that it will conduct a review in accordance with the law to protect fair competition in the market and safeguard the public interest. "I would like to stress once again that China has always firmly opposed the use of economic coercion, hegemony and bullying to infringe upon the legitimate rights and interests of other countries." What Happens Next The sources say a final agreement is unlikely before July 27, the previously agreed-upon deadline for negotiations between the three companies.