China dialed up scrutiny of Hong Kong billionaire Li Ka-shing’s planned Panama ports sale to a BlackRock Inc.-backed group while Donald Trump sought preferential treatment for U.S. ships in the waterway, adding to uncertainty over whether the blockbuster deal will proceed.
China’s market regulator said Sunday that its review of Li-owned CK Hutchison Holdings Ltd.’s sale of dozens of ports would cover all parties involved, and that the deal shouldn’t be implemented without the body’s approval.
Although the transaction only concerns CK Hutchison’s assets outside of China and Hong Kong, the regulator’s statement is seen as an assertion of Beijing’s control over businesses based in the Greater China region.
The U.S. and China have been embroiled in an escalating war of words over the Panama Canal, which handles roughly 3% of global seaborne trade, with the U.S. and China being its two main users. It’s piling further political pressure on Li as he tries to sell the two Panama ports, putting him in the crosshairs of tensions between the U.S. and China.
The escalating pressure from both sides highlights the increasingly tricky business environment that CK Hutchison and other major global companies have to navigate as trade tensions between the world’s two biggest economies ramp back up.
Trump started pushing for the U.S. to “reclaim” the waterway soon after taking office this year, and the latest statements from Beijing follow his call for “free of charge” passage of American ships through the Panama and Suez canals.
“Those Canals would not exist without the United States of America,” Trump wrote in a Truth Social post on Saturday, saying he had asked Secretary of State Marco Rubio to “immediately take care of” the situation.
China, meanwhile, recently told its state-owned firms to hold off on any new collaboration with businesses linked to 96-year-old Li and his family, Bloomberg reported in March, irked by his plan to sell them to the global consortium.
The relevant enterprises must abide by national laws and “immediately stop the relevant transactions,” according to an opinion column in pro-Beijing newspaper Ta Kung Pao. Otherwise, “the consequences will be very serious.”
‘American consortium BlackRock’
The deal was first announced in March, and involves 43 CK Hutchison-run ports in 23 countries. While work on the deal is still proceeding, including due diligence, accounting and tax checks, CK Hutchison already missed a target to sign a definitive agreement on the Panama part of the deal by April 2. If finalized, the transaction would net CK Hutchison $19 billion in cash proceeds.
The Wall Street Journal reported this month that there are discussions around separating the two Panama ports from the $22.8 billion deal to buy dozens of ports from CK Hutchison. Ta Kung Pao called it out as nothing more than a “public relations manipulation.”
“No matter how the name is changed, the subject of the transaction has always been the American consortium BlackRock,” the outlet said.
