Panama pushes back as canal ports become a US–China flashpoint

Panama’s President Jose Raul Mulino has publicly rejected a warning from China that the country would pay a “heavy price” after a Hong Kong company lost control of two ports on the Panama Canal, a dispute that has quickly grown into a broader geopolitical confrontation.

Writing on social media on Wednesday, Mulino said he “strongly” rejected Beijing’s threat, which followed a ruling by Panama’s Supreme Court invalidating a long-standing contract held by the Hong Kong-based company CK Hutchison. The ruling stripped the firm of its right to operate two key ports on the canal.

Mulino framed the decision as a matter of domestic law rather than foreign pressure. He said Panama is a country that upholds the rule of law “and respects the decisions of the judiciary, which is independent of the central government”. He added that the Panamanian Foreign Ministry would issue a formal response “and adopt the corresponding decisions”.

The loss of CK Hutchison’s concession has become a symbol of the intensifying struggle for influence between the United States and China in Latin America. Tensions escalated last year when US President Donald Trump openly threatened to take control of the Panama Canal, even raising the possibility of military action, and demanded the cancellation of the company’s contracts.

Those threats set the stage for Panama’s comptroller general to review the concession. The official later recommended that it be annulled, arguing that its terms ran counter to Panama’s national interests. Last week, the Supreme Court agreed, ruling that the contract was “unconstitutional”.

Beijing reacted sharply. China’s Hong Kong and Macao Affairs Office described the court’s decision as “absurd” and “shameful”, warning that Panama would pay “heavy prices both politically and economically”.

“Panamanian authorities must recognise the situation and correct their course,” the office said.

China’s Foreign Ministry echoed the criticism. Spokesman Lin Jian said Beijing would “firmly defend the legitimate and lawful rights and interests” of Chinese companies and accused Washington of operating with a “Cold War mentality and ideological bias”.

1. “It is quite clear to the world who exactly is seeking to forcibly own the Panama Canal and eroding international law in the name of the rule of law,” Lin added.

The Panama Canal, which connects the Atlantic and Pacific oceans, has long been a strategic artery for global trade. Since 1997, CK Hutchison had managed the ports of Cristobal on the Atlantic side and Balboa on the Pacific through its subsidiary, the Panama Ports Company. The operating concession was renewed for 25 years in 2021.

Following the court ruling, Panama moved quickly to ensure continuity of operations, appointing Danish shipping giant Maersk to temporarily manage the terminals until a new concession is awarded.