President Trump's claim that China controls the Panama Canal put the Hong Kong tycoon and his conglomerate at the heart of the US-China showdown.
Its vast company, CK Hutchison Holdings, is one of Hong Kong's most valuable, publicly listed companies, and counts some of the world's largest investors as shareholders. One of its subsidiary, Hutchison Ports, has been involved in the Panama Canal since 1997.
Of the five ports in Panama, Hutchison is the largest. One is at both ends of the canal. Last year, Hutchison's port provided a vessel that carries 39% of the cargo containers that passed through the canal, one of the world's most important waterways, the Panama Maritime Authority. (The other ports are owned by a Taiwanese company, a Singapore company, and a joint venture in Panamani.)
The company's role surfaces an open issue for Washington about Beijing's impact on Hong Kong, China's special administrative region. The Trump administration argues that China can use its influence on Hong Kong companies to force Panama to limit US trade at ports.
What is CK Hutchison and who is this big name?
Li Ka-Shing, founder of CK Hutchison's billionaire, is a Hong Kong legend. High school dropout Li (now 96) has transformed small businesses selling plastic flowers into an empire spanning infrastructure, finance, retail and telecommunications.
Hutchison Port, a subsidiary of CK Hutchison, listed in Singapore, operates the Port of Balboa and Cristobal on the Pacific and Atlantic sides of the Panama Canal. The company employs 30,000 people and operates 53 ports in two dozen countries. Its biggest shareholders are BlackRock and Vanguard, two of the world's largest asset managers.
For decades before retiring in 2018, Li ran his business in ways that Chinese companies couldn't do, leveraging Hong Kong's free market and various laws. Like other Hong Kong entrepreneurs, Li has developed relationships with Beijing's top Chinese leaders and invested in China.
Recently, however, Li has sometimes spoken about China's growing grip in Hong Kong. In 2019, when democratic protests met police, Beijing looked at the city's elites lined up and collapsed, asking authorities to exercise restraint.
Since then, Li has sold many of his real estate holdings in China and has circulated some of his investments into Europe.
What does Hutchison Port do on the Panama Canal?
Hutchison has operated the Port of Balboa and Cristobal since 1997 when Panama granted its 25 years of concession. It is the Panama government's shareholder and the only port operator to receive payments for vessel movements through canals and dividends.
However, Hutchison's concessions to operate the port, which was renewed for another 25 years in 2021, are now in question.
Panama officials have pledged to conduct an audit to ensure that Hutchison “is properly reporting income, payments and contributions to the state.” On January 21st, almost 12 auditors entered the company's office and began work.
Additionally, two Panama lawyers filed a lawsuit this week challenging the contract with Hutchison, saying they violated Panama's constitution. “We believe that the Panama government will provide a fair environment for businesses, including Hong Kong companies,” the Chinese government said on Wednesday.
Hutchison Ports and its parent, CK Hutchison, did not respond to repeated requests for comments.
If CK Hutchison is in Hong Kong, why is he called China?
It relates to the extraordinary positions of older line companies like Hong Kong and CK Hutchison.
Hong Kong was ruled by the UK for a century and a half before it was returned to China in 1997. That changed in 2020 when Beijing imposed national security laws on Hong Kong after democratic protests broke out in cities.
Beijing's strict control over Hong Kong has wiped out political opposition. Much of what makes Hong Kong different from China is eroding like a vibrant civil society or a potentially independent company.
In his first term, Trump signed an executive order revoking a special designation under American law, allowing the United States to treat Hong Kong differently than China on issues of immigration and trade. During his term, President Joseph R. Biden Jr. extended the executive order.
Meanwhile, Hong Kong authorities are taking steps to demonstrate their loyalty to Beijing.
“Everything has to be “Hong Kong in China,” said longtime Hong Kong investor David Webb. “It's not really surprising that Hong Kong businesses are considered Chinese.”
What is the involvement of mainland China in Panama?
The Trump administration's concerns about China's impact in Panama are part of the broader concerns about China's Belt and Road Initiative, a program that funded and built infrastructure projects around the world. Panama became the first Latin American country to join the Belt and Road in 2017.
Panama's US Secretary of State Marco Rubio visited this week, Panama President Jose Raul Murino said he would not renew the road agreement with the Belt. However, Beijing has already reduced its lending around the world.
Panama received a grant and loan commitment worth $669.77 million from China, which is about half of the neighboring Costa Rica's grant and loan commitment, according to Aiddata, a research project by Williamsburg, Virginia. It's there. Panama's biggest Chinese funding was $200 million. A loan commitment from the state-owned export and import bank of China in 2019 to a privately owned bank of Panama.
China had planned to do more for Panama after a visit from top leader Xi Jinping in 2018. However, the president of Panama led the slope towards Juan Carlos Valera in Beijing in 2019.
Mary Trinie There contributed to reports from Panama City, Annie Coleir of Mexico City and Zixu Wang of Hong Kong.
