The Panama Ports Sale to U.S. Investors Sparks Criticism in China Aimed at Hong Kong

CK Hutchison is expected to sign an agreement on the sale of its two Panama ports to a group led by BlackRock by April 2. The Hong Kong group, selling ports in the Panama Canal to a group of investors led by the U.S. hedge fund BlackRock is drawing criticism. The deal was hailed by President Trump as part of his administration’s efforts to reclaim the Panama Canal, but the governments of Beijing and Hong Kong are not happy. The Ta Kung Pao paper, with pages below, said in a commentary on March 21 that the transaction will damage China’s national security and development interests, directly violating Hong Kong’s laws on safeguarding national sovereignty, security and development interests. It was supposed to be a win-win for CK Hutchison – a huge and, as financial news network CNBC described it, fascinating deal that caught the industry by surprise. It was fascinating news that BlackRock is agreeing to purchase Panama Canal ports and over 40 additional ports from CK Hutchison Holdings. 

The company is selling its global ports business for a hefty price tag while also getting itself out of a geopolitical spat brewing over ports it owned in the Panama Canal. But now, the legendary Hong Kong group has found itself in the crosshairs of Beijing, even though in the U.S., it was seen as a conduit for Chinese influence abroad. Over the past while, Hong Kong government websites reposted scathing commentaries published by a Beijing-backed newspaper. One accused CK Hutchison of, quote, “groveling” and “profit-seeking” and “selling out all Chinese people.” The other appeared to take aim at billionaire Li Ka-shing, CK Hutchison’s 96-year-old founder and Hong Kong’s richest man. Titled “Great Entrepreneurs Are All Patriots,” the commentary questioned whether CK Hutchison’s ports deal is, quote, “aiding and abetting evil and harming China and the world.”  The criticism of the deal, including the sale of assets near the Panama Canal to a BlackRock-led consortium, will, in particular, sharpen the scrutiny of a possible sale of the US assets of TikTok, owned by Chinese firm ByteDance, they added.

Hong Kong’s chief executive, John Lee, went a step further, suggesting Hong Kong businesses are being discriminated against.  We oppose the abusive use of coercion or bullying tactics in international economic and trade relations.  A CK Hutchison spokesperson has previously said the deal is purely commercial in nature and unrelated to geopolitics concerning the Panama ports. But now, the company is in the middle of a domestic political storm. Faced with the recent barrage of attacks, CK Hutchison canceled a regularly scheduled press conference around their annual earnings report and its share price is down by more than 6%. “Stop the transaction and do not make the wrong calculation,” the paper said in the article. Ta Kung Pao has blasted CK Hutchison for “spineless groveling” to Mr. Trump and “selling out all Chinese people” in previous commentaries, which were reposted by China’s top office on Hong Kong affairs, signaling that the criticism reflects the government’s view. They said “Those who repeatedly emphasize that this deal is a ‘legal transaction’ under the freedom of contract are too naive and confused.”