China is calling on state-owned enterprises to suspend plans for new projects in Panama in retaliation for the country's move to revoke Hong Kong-based CK Hutchison's leases for ports near the Panama Canal, Bloomberg reported, citing people familiar with the matter.
The January 29 ruling by Panama's Supreme Court is seen as a win for U.S. President Donald Trump, who has claimed China controls the Panama Canal, a charge denied by both Beijing and Panama. Washington has sought to curb Chinese influence in Latin America, where China has expanded its presence through major infrastructure investments. The move also comes as the U.S. renews its focus on the Western Hemisphere, a foreign policy shift known as the "Donroe Doctrine."
The U.S. ceded control of the Panama Canal Zone to Panama in 1999, but remains the canal's largest user. About 5 percent of global trade, valued at roughly $270 billion, passes through the 50-mile waterway each year, and the U.S. Navy relies on it to move ships between the Pacific and Atlantic oceans.
Newsweek reached out to Panama's Foreign Ministry via email for comment.
The suspended potential deals could lead to billions of dollars in lost investment, Bloomberg's sources said, speaking on condition of anonymity due to the sensitivity of the matter. Meanwhile, Chinese customs officials have stepped up inspections of inbound goods from Panama, including coffee and beans, they said.
"China has repeatedly stated its position on Panama's port-related issues, and this position is clear. Please contact the Chinese authorities for the specific situation you mentioned," Chinese Foreign Ministry spokesperson Lin Jian told reporters Friday when asked whether the reports were part of retaliation previously signaled by Chinese officials.
China's office for Hong Kong and Macau affairs called the court ruling a breach of trust and warned that Panama would "pay a heavy price."
Panama Ports Company, the CK Hutchison subsidiary that operates the ports, was granted a 25-year extension in 2021 for its operations at the Balboa and Cristóbal terminals. Lawsuits seeking to void the concessions were filed last year by Panama's comptroller general, who cited irregularities and argued the deals were harmful to national interests.
Panama Ports Company said Tuesday in a press release: "PPC and its investor have invested extensively in infrastructure, technology, and human development -- an amount multiple times the investment made by any other port operator in the country. These investments have generated thousands of direct and indirect jobs and have been determinant in establishing Panama as a globally recognized port and logistics hub, attracting the world's leading shipping lines and generating positive impact for the entire nation."
A State Department spokesperson told Newsweek last week: "The United States remains concerned about Chinese influence near the Panama Canal, especially through companies linked to the CCP (Chinese Communist Party). We appreciate Panama's actions to curb CCP influence in the canal and the region through decisions such as exiting Beijing's Belt and Road Initiative and auditing the Panama Ports concession."
Panama Ports Company said it has begun arbitration proceedings against the Panamanian government. Responding to criticism from Beijing, Panamanian President José Raúl Mulino told reporters he hoped tensions would "not escalate."
"Panama is a dignified country and will not allow itself to be threatened by any country on earth," he said Thursday, according to the Associated Press.
A local subsidiary of Danish logistics firm Maersk is prepared to step in to help ensure minimal disruption at the terminals, Panamanian authorities said earlier this week.