Pro-Beijing Newspaper Condemns Panama Court Decision on CK Hutchison Ports
A pro-Beijing newspaper has strongly criticized a ruling by Panama's highest court that invalidated CK Hutchison Holdings Ltd.'s contract to operate two ports. The commentary, published in Ta Kung Pao on Saturday, accuses the court of submitting to pressure from the United States and advises Hong Kong businesses to exercise caution regarding investments in the region.
Allegations of Judicial Bias and US Influence
The newspaper asserts that the ruling demonstrates Panama's lack of judicial independence and its readiness to use legal processes to meet US demands. According to the commentary, this decision reflects broader geopolitical tensions, particularly as the two ports are part of CK Hutchison's proposed sale of 43 global facilities to a consortium. This consortium includes China Cosco Shipping Corp., Italian billionaire Gianluigi Aponte's Terminal Investment Ltd., and US investment firm BlackRock Inc.
Hong Kong businesses should take necessary risk precautions, avoid going there and refrain from investing unless necessary, the newspaper stated. It further urged Panama to immediately correct what it termed an erroneous ruling and compensate affected companies for their losses. The paper warned that failure to do so could damage economic and trade relations between Panama and China and undermine confidence among Chinese enterprises.
Geopolitical Context and Rising Tensions
The article highlights Beijing's dissatisfaction with the ruling, which US Secretary of State Marco Rubio has praised as a positive development. Escalating tensions between Washington and Beijing over the strategic Panama Canal could further complicate the ports sale by billionaire Li Ka-shing's CK Hutchison. Announced in March last year, this transaction has become one of the tycoon's most geopolitically challenging deals, despite its potential to generate over $19 billion in cash if completed.
CK Hutchison invited state-owned Cosco to join the buying consortium last year after BlackRock's involvement angered China. Beijing denounced the deal as yielding to US pressure, which it claims undermines China's global trade and shipping ambitions. President Donald Trump has portrayed the sale of the Panama ports as a victory for US influence in the waterway.
Strategic Adjustments and Broader Criticisms
To advance negotiations and mitigate regulatory risks, the involved parties have considered dividing the assets into separate parcels with different ownership structures. This would allow Cosco to acquire larger stakes in ports located in regions more favorable to China, according to sources familiar with the matter.
It's clear to everyone that this 'ruling' hides ulterior motives, Ta Kung Pao remarked in the commentary. The newspaper argued that CK Hutchison's invitation for Cosco to join the buyers was perceived by Panama as an opportunity to gain favor with the US, which frequently cites national security to hinder Chinese investment in the canal.
The paper also criticized Panama for several other actions, including:
- Conducting joint military exercises with the US
- Withdrawing from China's Belt and Road Initiative
- Allowing the demolition of a monument built by the local Chinese community to commemorate friendship between the two countries
Implications for Global Business and Investor Confidence
Previously, Ta Kung Pao had called on China to block the ports sale on national security and antitrust grounds before Cosco entered the talks. The newspaper now contends that the ruling poses significant risks to normal business operations worldwide and should serve as a warning to global investors.
Before Cosco joined the buying consortium, China vowed to investigate the deal and instructed state-owned enterprises to cease collaboration with the Li family. Amid these political tensions, the efforts of Li's second son, Richard Li, to expand his insurance business into mainland China have stalled.
This situation underscores the complex interplay of geopolitics, investment, and international relations, with potential repercussions for global trade and economic stability.
