The US-China power struggle brought the Panama Canal back into the spotlight

A Simmering controversy The two container ports at either end of the Panama Canal threaten to become a geopolitical flashpoint between the world’s two largest economies: the US and China.

It is as follows a Controversial decision of Supreme Court of Panama Cancellation of license of Hong Kong-based subsidiary CK Hutchison To operate two major terminals on the waterway, through which some 40% of US container traffic transits each year.

This decision given by the White House was considered a big victory for America Countering China’s influence One of his top priorities is the global trade artery.

China has tried to raise the stake in recent days. Beijing, still his strong rebuke warned Wednesday that the Central American country “will inevitably pay a heavy price, both politically and economically,” unless it changes course.

The Hong Kong and Macao Affairs Office of China’s State Council said the court’s decision “logically flawed” and “absolutely ridiculous.”

In response, Panamanian President Jose Raul Mulino dismissed China’s threats and said on Wednesday that he “emphatically rejected” the statement from the Hong Kong and Macao Affairs Office.

the mill Said on social media Panama was a “rule of law country” that respected the decisions of its Supreme Court, decisions made by the judiciary were independent of the central government.

CK Hutchison said Wednesday that it has taken Panama to international arbitration and that it “strongly disagrees with (the court’s) determination.”

Analysts expect the impact of this decision to last for a long time.

As questions linger about the security risks posed by CK’s management of the ports and whether there are any mitigation measures, it “looks like an easy contest for dominance in Latin America,” said Scott Kennedy, senior adviser at the Center for Strategic and International Studies.

Kennedy added, “In addition to the political and economic pressure exerted by both Beijing and Washington, a legal fight is likely.

Relations between the two superpowers soured last year as President Donald Trump imposed massive tariffs on Chinese exports and Beijing tightened its grip on rare earth exports. Geopolitical tensions have also weighed on relations, including Beijing’s stance on Taiwan, support for Russia’s war in Ukraine, and US military action in Venezuela and Iran.

CK Hutchison negotiated a $23 billion deal with a BlackRock-led consortium in March last year to sell its non-Chinese port subsidiaries. It later drew criticism from Beijing, which described the deal as “Cowwing” American pressure.

Chinese authorities have tried to shape this agreement by demanding this Go through China’s merger review process and proposed State-owned shipping conglomerate Cosco To join an acquired team.

In the next growth sign, China Directed State companies have halted discussions on new projects in Panama, Bloomberg reported Thursday, and have asked shipping companies to consider moving cargo from other ports.

According to Bloomberg, Chinese customs officials plan to increase inspections on Panamanian imports, including bananas and coffee.

Jack Li, an analyst at China Macro Group, said that given Trump’s view of the canal as a strategic chokepoint, any response from Beijing to steer Panama in the opposite direction is unlikely.

China’s response will be carefully calibrated and largely symbolic, aimed at showing disapproval rather than forcing a policy change, Li said, adding that the Panama case exposed Beijing’s vulnerability to protect its economic interests in the region when challenged by US pressure.

China has increased investment in strategic infrastructure across Latin America, including a major deep-water port in Peru. The Chanke PortOperated and majority owned by state-owned Cosco, shipping times are expected to be cut in half.

An analyst at the Foundation for Defense of Democracies, a Washington DC-based think tank, warned that the Chinese government appears to be “stifling the maritime industry”.

An article published Monday by FDD’s Elaine K. Dezenski and Susan Soh said China controls more than 100 foreign ports on every continent except Antarctica and manufactures more than 95% of shipping containers and 70% of ship-to-shore cranes.

China dominates the world’s shipbuilding orderbook, with nearly two-thirds of global orders flowing to Chinese yards by 2025. Industry ReportCiting data from maritime research firm Clarkson.

Meanwhile, around 40% of US container traffic Travels annually through the Panama Canal, which moves a total of $270 billion in cargo annually.

Any expansion of Beijing’s maritime dominance, therefore, could threaten the same dependence that the US and its allies face on critical minerals and rare earths, according to the FDD.

United Nations Secretary-General Antonio Guterres called recently US and China Power Strugglewarned that global problems “will not be solved by one power calling the shots”.

“We see – and many relate to the future – the idea that there are two poles, one centered in the US and the other in China,” Guterres said at a press conference on January 29.

“If we want a stable world, if we want a world in which peace can be sustained, in which development can be normalized and in which our values ​​ultimately prevail, then we need to support multi-polarity,” he added.