Global events have dominated Taiwanese news and talk shows in the past few days, from US President Donald Trump’s public berating of Ukrainian President Volodymyr Zelenskiy during a White House meeting, to Trump and Taiwan Semiconductor Manufacturing Co CEO C.C. Wei (魏哲家) jointly announcing that the company would invest an additional US$100 billion in the US. However, another major event also deserves serious attention: Hong Kong-based CK Hutchison Holdings Ltd’s announcement that it is selling its controlling stake in a unit that operates two Panama Canal ports to a group of investors led by US asset management giant BlackRock Inc.
CK Hutchison won the rights to manage the Balboa and Cristobal ports, on the canal’s Pacific and Atlantic entrances respectively, in 1997. In 2021, its contract with the Panamanian government was extended until 2047. CK Hutchison said in a statement that the BlackRock deal was purely commercial and unrelated to politics, and expects to receive more than US$19 billion from the sale. However, it would appear that Trump’s comments that he would not rule out a military invasion to take control of the vital waterway due to national security concerns had influenced the company’s decision.
“We’re taking it back,” Trump said during his inaugural address in January.
Trump administration officials said that China controls the Panama Canal, which Beijing has denied, and that it imposed excessive fees on US vessels. In a show of the importance of the canal to Washington, US Secretary of State Marco Rubio on Feb. 1 visited Panama on his debut trip abroad as the nation’s top envoy. Panamanian authorities in January sent a team to Hutchison subsidiary Panama Ports Co to review whether public resources were being used transparently, and Bloomberg News, citing anonymous sources, reported on Feb. 4 that Panama was considering terminating its contract with CK Hutchison.
Owned by Hong Kong billionaire Li Ka-shing (李嘉誠), CK Hutchison is one of the territory’s largest conglomerates, with businesses spanning finance and retail to infrastructure, telecommunications and ports. It seems that the company tried to reach the BlackRock deal as fast as it could amid Trump’s escalating threats to seize the canal. Under the agreement, the BlackRock-led group would not only receive a 90 percent stake in Panama Ports Co, but also gain control of an 80 percent interest in another CK Hutchison subsidiary, Hutchison Port Holdings Ltd, which operates 43 ports in 23 countries.
If completed, the Hong Kong firm would be selling off most of its port business, not only to give face to Trump and without embarrassing the Panamanian government, but to gracefully step away from the ongoing US-China rivalry. The 96-year-old Li might have made a wise decision, sensing a storm coming. The deal might also lead more companies to reconsider their financial and business strategies amid growing geopolitical tensions.
As Washington regards infrastructure related to Beijing as a security issue, the US might soon heighten its focus on China’s infrastructure investments in countries involved in its Belt and Road Initiative, and target more companies involved in critical infrastructure projects. Going down that road could erode confidence in the expansion of that initiative among investors and recipient countries.
In addition, Trump’s potential crackdown on China’s maritime dominance, and his plans to impose docking fees on ships flying the Chinese flag or built in China when they call at US ports, suggest that the strategic competition between Washington and Beijing would only intensify.
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