China has sent a delegation to Panama after the Trump Administration’s push to take greater control of the canal and ports at either end owned by a Hong Kong conglomerate.
Chinese state media have fiercely criticized a $23-billion deal last week by CK Hutchison to sell the two Panama ports and 41 others in 22 additional countries to US investment giant BlackRock.
Beijing hopes to “understand what is unfolding” and possibly reverse Panama’s decision to withdraw from its much-touted Belt and Road scheme and retain control of the Panama ports, according to a report by the South China Morning Post on Monday.
ALSO SEE: ‘Crash in Sentiment’ Spurs Plunge in Investment in US Equities
However, that may be difficult given President Trump has reportedly asked the US military to consider all options to oust China’s foothold in the vital Central American waterway, either by force or legal moves to challenge CKH’s control of the two ports.
Meanwhile, there have been reports that China is scrutinising the port sale, while the Communist Party’s rhetoric has not ceased.
‘Bullying’ by foreign governments
Hong Kong’s leader John Lee voiced opposition on Tuesday to “bullying” by foreign governments, when asked about CK Hutchison’s port deal with BlackRock.
“(The Hong Kong) government urges foreign governments to provide a fair and just environment for enterprises,” Lee told reporters at his weekly press conference.
“We oppose the abusive use of coercion or bullying tactics in international economic and trade relations.”
The deal became highly politicized when Trump hailed the deal after previously calling for the Panama Canal to be removed from what he said was “Chinese control”.
Other American politicians have said CK Hutchison’s operation of the ports represented a security risk to the US due to its reliance on the trade of goods through the canal.
On Tuesday, there was also a report saying Chinese authorities have begun looking into the ports transaction, directing multiple agencies to review the deal for potential security risks and antitrust violations.
CKH: Deal is purely commercial
CK Hutchison did not immediately respond to a request for comment on the report. It has previously said the deal is “purely commercial in nature and wholly unrelated to recent political news reports concerning the Panama Ports”.
It was not immediately clear what levers, if any, China could pull to block the deal, given the business that CK Hutchison is selling is outside China and Hong Kong, while the company itself is registered in the Cayman Islands.
Hong Kong leader Lee told reporters “any transaction must comply with legal and regulatory requirements”, adding the city would handle it “in accordance with the law.”
Shares of Hutchison fell as much as 4.9% on Tuesday, hitting their lowest since March 4.
A Hong Kong-founded and -listed firm owned by billionaire Li Ka-shing, CK Hutchison has said its business operations are independent from China.
A week after news of the ports deal, China’s Hong Kong and Macau Affairs Office reposted two commentaries criticizing CK Hutchison and saying the sale was a betrayal of China that neglected national interests.
While CK Hutchison agreed to negotiations with the BlackRock consortium on an exclusive basis for 145 days according to a statement, the deal has not yet been finalised.
Hong Kong’s edge as an international financial centre is expected to erode further as it gets squeezed by geopolitical tensions, some executives and analysts have said.
As the controversy escalates, two sources told Reuters on Monday that CK Hutchison will not hold earnings conferences after it reports results on Thursday, a highly unusual move for the conglomerate.
Reuters with additional input and editing by Jim Pollard
ALSO SEE:
Cloud Over Panama Ports Deal: China Slams HK Owner’s Sellout
Trump Launches Tariff Wars, China Hits Back With 10-15% Duties
Trump’s Steel Tariff to Hit Chinese Supply Lines via Other Nations
Chinese Ships May Face a Hefty Fee to Enter US Ports
US Policy Upheaval Has Asian Chip Giants on Tenterhooks
Japanese Carmakers Want Government Help to Negate US Tariffs
China Needs Tech Self-Reliance to Avoid Being Strangled: Xi
Xi Jinping Seen Luring Trump Into a New US-China Trade Deal
China Seen Taking on More Debt to Counter Trump Tariffs
