Summary
Panama has moved to take control of two key ports linked to the Panama Canal, drawing the dispute into a wider U.S.-China tug-of-war over influence and logistics. The government occupied the ports at Balboa on the Pacific side and Cristobal on the Atlantic side after Panama’s Supreme Court ruled that the concession held through a Hong Kong-based company’s local unit was unconstitutional.
The action prompted a sharp reaction from Beijing, and it also triggered comments from U.S. officials earlier that Washington viewed the port arrangement as unacceptable. U.S. President Donald Trump had complained even before taking office for a second term that China was running the canal, citing concerns about the Hong Kong-based parent behind the company operating the ports, according to the report.
Panama’s Supreme Court ruled in late January that the concession awarded to a local subsidiary of Hong Kong’s CK Hutchison was unconstitutional. The Panamanian government said it was acting only in accordance with the law, while China alleged that the court case reflected “hegemonic” pressure, the report said.
On Thursday, investigators removed boxes of documents from Panama Ports Co., and China threatened consequences for Panama. In response, President José Raúl Mulino told China: “be careful,” and added, “They need us more than we need them,” as the dispute intensified alongside legal proceedings and diplomatic warnings.
The ports themselves sit at the entrances of the Panama Canal and are separate from the autonomous Panama Canal Authority that operates the waterway. Although Panama is not a major direct importer or exporter, cargo ships arrive daily from Asia, Europe and both U.S. coasts, then unload containers in Balboa, Cristobal and other ports for onward shipping, the report said.
The Balboa port and the Cristobal port handle around 39% of Panama’s container traffic, and about 7,000 people work at the two facilities. The ports have been operated by Panama Ports Company, a local subsidiary of Hong Kong’s CK Hutchison, since 1997.
The Trump administration’s concern about the port operator surfaced through the U.S. government’s broader focus on national security. The report said that Panama’s comptroller announced it was starting an audit of the Panama Ports Co. concession on Jan. 20, 2025, the day of Trump’s inauguration, and that later U.S. Secretary of State Marco Rubio visited and said a Chinese company running the ports was unacceptable, also suggesting China could obstruct canal traffic if it wanted to.
China and Panama have traded accusations over the court case and what it means for future operations. After the Supreme Court decision, China’s office overseeing Hong Kong affairs criticized the ruling and said it showed Panamanian authorities were bowing down to “hegemonic powers,” while Panama Ports Company began arbitration proceedings after the decision.
Panama’s Economy Minister Felipe Chapman said the company is seeking $1.5 billion, and he said Panama’s government seized the ports this week to ensure their continued operation and to determine their real value. The report said Chapman also described arbitration as something that could take years, while the government prepared a process for a new operator as the legal drama continues.
Friday, Panama Ports Co. confirmed that Panamanian authorities had seized documents and said the forced takeover and occupation of the company’s property were a failure due to what it described as illegal, nontransparent and poorly coordinated conduct. Mulino said the court’s decision is final and must be respected as the ports continue operating while the transition and rebidding process moves forward.