China has threatened to block a crucial ports deal in Panama unless its state-owned shipping conglomerate, Cosco Shipping, is granted a significant stake in the project. This development adds another layer of complexity to the already tense global trade dynamics. The ports deal, valued at around $20 billion, involves the transfer of more than 40 global ports owned by business magnate Li Ka-Shing to US asset manager BlackRock and Mediterranean Shipping Company (MSC).
China is demanding that Cosco be an equal partner to BlackRock and MSC in the deal. “As far as I know, the Chinese State Administration for Market Regulation once stated that it would review in accordance with the law the plan of CK Hutchison Holdings to sell assets such as the Panama Canal Port, to protect fair market competition and safeguard public interests,” Liu Pengyu, spokesperson for the Chinese Embassy, told in a statement. He added, “As a principle, I would like to stress that China has always firmly opposed economic coercion and domineering and bullying practices.”
The firms are currently staring down a July 27 deadline, when exclusive talks between the three partners will end and Cosco can be added to the deal.
The inclusion of Cosco in the deal emerged following intense US-China trade talks in Switzerland, reported last month. Chinese authorities have told BlackRock, MSC, and Hutchison that without Cosco’s inclusion in the deal, Beijing will take steps to block the sale.
China stakes claim in Panama deal
The firms involved in the deal are keen to maintain good relations with China. BlackRock and Hutchison both have substantial interests in the nation, and MSC is one of the largest shippers of Chinese exports in the world. The deal is expected to position MSC as the world’s largest terminal operator, although BlackRock is notably expected to take over the two key Panama ports included in the sale.
This development comes after a history of China blocking similar deals, such as the 2014 rejection of a major shipping alliance between MSC, Denmark’s AP Moeller-Maersk, and France’s CMA CGM. Chinese officials have also instructed state-owned companies to freeze any incoming deals with Hutchison or other businesses linked to Li. The situation highlights China’s assertive approach in securing critical infrastructure projects worldwide.
Representatives from China and Panama have yet to provide official comments on the matter. The situation is still unfolding, and further details are expected as negotiations progress.