China reacted strongly on Tuesday to the Panamanian decision to cancel the port concessions granted to the Hong Kong group CK Hutchinson on the Panama Canal. The shadow of Donald Trump hangs over this standoff which could decide the winner of the Sino-American rivalry in Latin America.
Published on: 02/05/2026 - 5:57 p.m. Modified on: 02/05/2026 - 6:56 p.m.
Donald Trump spoke about it upon his return to the White House: China controls the Panama Canal behind the scenes, and the United States is ready to take control of it if necessary. It was in his inaugural speech on January 20…
Then there was Iran, Venezuela and even Greenland, totally eclipsing what was happening in this small Latin American country with its immensely important trade channel.
Vitriolic press release
However, Panama has become, in one year, one of the main battlegrounds of the Sino-American rivalry. The situation has quickly deteriorated over the past ten days.
The trigger was a decision handed down by the Supreme Court of Panama on January 30. It judged the concessions granted in 1997 to the Hong Kong giant CK Hutchison on the ports at both ends of the Panama Canal as “unconstitutional”.
Enough to arouse the ire of Beijing. China issued a long statement of 800 words on Tuesday February 3, openly criticizing and threatening the Panamanian authorities while covertly denouncing American “influence and intimidation”.
Also read: Chinese influence in Panama: what reality behind Donald Trump's fantasies?
This judgment would be “pathetic”, “extremely shameful, or even “absurd from a legal point of view” assured the Hong Kong authorities, statements echoed by the official media of mainland China.
Panama “will pay a high price” if this decision is actually implemented, Chinese authorities added. “It is not common for Chinese diplomacy, which generally expresses itself in a more cautious manner, to react in this way,” underlines Mario Esteban, director of the Center for East Asian Studies at the Autonomous University of Madrid, who has worked on relations between China and Latin America.
A violent reaction which is largely explained by the fact that “this is the first time that China is directly threatened” by Washington’s pressure on a Latin American country, assures Tabita Rosendal, specialist in Chinese foreign policy at Lund University (Sweden) who has worked on the maritime aspect of China’s New Silk Roads. The arrest in Venezuela of Nicolas Maduro or the American threats against Mexico, one of China's main economic partners in Latin America, only affected Chinese interests “by ricochet”, specifies this expert.
A short tour along the New Silk Roads and then off
But Panama represents “a particularly sensitive country for Beijing,” assures Rodrigo Martin, who worked on relations between this Latin American country, China and the United States for the University of Salamanca (Spain).
Firstly because “the Panama Canal is a nerve corridor for world trade and serves as a gateway for the Chinese fleet to pass from the Pacific coast, where China is located, to the Atlantic coast,” adds this specialist.
There is no question for Beijing to lose free and uncontrolled access to this maritime passage. The decision of the Supreme Court of Panama does not, in theory, result in any change to freedom of movement in the canal. But for Beijing, there will necessarily be a new, less comfortable reality: "The new port managers [the Danish shipowner Maersk has been operating them temporarily since the beginning of February, Editor's note] will necessarily be American or approved by Washington. They will surely look more closely, compared to CK Hutchison, at everything that Chinese ships transport", estimates Amalendu Misra, specialist in international relations of the countries of the Global South at the University of Lancaster.
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Then there is the symbol. Twenty years after letting CK Hutchinson manage the canal ports, Panama was the first Latin American country to join the “New Silk Roads” in 2017, this vast program launched by China to expand its international influence by investing in the infrastructure of foreign countries. “It was through Panama that China then extended its influence to other countries in the American subcontinent,” explains Amalendu Misra.
To cement its presence in this strategic country, China has invested massively in infrastructure, such as roads and telecommunications, in seven years. “These investments reached $1.4 billion in 2024,” underlines Ruben Gonzalez Vicente, an economic policy specialist who works on relations between China and Latin American countries at the University of Birmingham.
And it only took one year of Trump 2.0 to call everything into question. Indeed, even if the American president's accusations against the “control” exercised by China over the operation of the canal are unfounded, the Panamanian authorities nevertheless immediately launched an audit of the concessions granted to CK Hutchison. Conclusion: the Hong Kong company did not respect several clauses of the concession contracts. This audit then served as the basis for the Supreme Court's decision.
In the meantime, Panama has also left the “New Silk Roads”.
“Beginning of the end of Chinese presence in Latin America”?
The Panamanian stronghold turned out to be little more than a house of cards. The Chinese were reluctant to see the concessions being canceled even though they had posed no problem for around twenty years, and had even been renewed in 2021. “The Panamanian authorities assured that this decision allowed the country to maintain its neutrality [vis-à-vis the two rival powers, Editor's note]. But for the Chinese it is clearly a sign that from now on the Americans can expel whoever they want from what they consider to be their sphere of influence, without burdened by the fact that contractual links bind China to local actors,” summarizes Ruben Gonzales Vicente.
Beijing’s main fear “is the domino effect,” says Tabita Rosendal. "In the case of Panama, it is a private Hong Kong company which is concerned. Tomorrow, it could be large public groups which have interests in Peru, Mexico or even Argentina", specifies this specialist.
Read alsoVenezuela: how the capture of Maduro weakens China in Latin America
“This contagion is very likely because Latin American countries will no longer want to enter into commercial contracts with China if Donald Trump can then put pressure on these agreements to be canceled,” believes Amalendu Misra. For him, the Panamanian turnaround “marks the beginning of the end of the Chinese presence in Latin America”.
The other experts interviewed are less categorical. It all depends on the Chinese response. A long, vitriolic press release will not be enough to calm Trumpian ardor. CK Hutchison has already initiated arbitration proceedings against Panama.
China can add economic sanctions such as stopping investments in Panama “to make an example and deter other Latin American countries,” notes Tabita Rosendal. A double-edged strategy: “This risks confusing the image that China is constructing of being on the side of the southern countries against the United States,” notes Mario Esteban.
For him, the best chance for Beijing is precisely to launch a diplomatic offensive with other countries in the region to present itself as the power that can be counted on, unlike the increasingly aggressive Americans.
Beijing will probably also be keen to “restore the balance with the United States”, estimates Mario Esteban. Being partially kicked out of Panama in this way will probably lead to a response. Which ? “Nothing will be decided before Donald Trump's planned visit to Beijing in April and how this summit meeting will take place,” concludes this expert.
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