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Executive Decree No. 23 transferred control of the Balboa port on the Pacific side and the Cristobal port on the Atlantic side directly to the state. Government officials reportedly took command of cranes, systems, and facilities almost immediately.
For 29 years, CK Hutchison had managed these strategic ports. When the original agreement was signed in 1997, the Clinton administration reviewed and cleared the deal. At the time, it was seen as routine commercial activity.
But the geopolitical landscape changed dramatically.
In 2020, Beijing tightened its grip over Hong Kong, effectively bringing major firms under the shadow of the Chinese Communist Party. CK Hutchison’s leadership maintained longstanding ties to Beijing. Founder Li Ka-shing cultivated relationships with Chinese leadership for decades, and his son, Victor Li, sits on the Chinese People’s Political Consultative Conference.
When Panama extended the contract in 2021 for another 25 years, critics argue that China effectively controlled both entrances to one of the world’s most vital trade arteries.
The Panama Canal carries roughly five percent of global trade and about 40 percent of U.S. container traffic, amounting to hundreds of billions of dollars in goods each year.
Trump’s critics dismissed his canal comments as bluster. But behind the scenes, Washington was moving.
Defense Secretary Pete Hegseth increased naval engagement in the region and strengthened security cooperation with Panamanian President José Raúl Mulino. Panama later announced it was withdrawing from China’s Belt and Road Initiative, a key pillar of Beijing’s global infrastructure push.
Beijing attempted to salvage its foothold. A senior Chinese delegation reportedly traveled to Panama City in hopes of stabilizing relations. The effort fell flat.
As pressure mounted, CK Hutchison agreed to sell its canal port interests to a U.S.-led consortium headed by BlackRock in a $22.8 billion transaction. That deal, however, was blocked by Beijing, which ordered its companies not to proceed.
Then came the judicial earthquake.
Panama’s Supreme Court voided the contracts outright.
CK Hutchison has accused Panamanian authorities of intimidation and declared the takeover “unlawful.” The company is now pursuing international arbitration and seeking $2 billion in damages.
China’s Hong Kong and Macao Affairs Office responded with a warning, stating Panama would pay a “heavy price, both politically and economically.”
Panama did not blink.
Interim operations at Balboa were handed to Danish shipping powerhouse A.P. Moller-Maersk, while Cristobal operations were assigned to Switzerland-based Mediterranean Shipping Co. as new long-term concessions are prepared.
The broader strategic implications are impossible to ignore.
China’s Belt and Road Initiative has long focused on critical maritime chokepoints — ports and passages that shape global commerce. CK Hutchison operates dozens of ports across multiple continents, many aligning closely with Belt and Road corridors.
Critics argue that the canal episode highlights the difference between rhetoric and execution.
Trump warned that China was positioned at both ends of the canal. He was ridiculed. Thirteen months later, Panama’s highest court erased those contracts, the country exited Belt and Road, and Chinese operators were forced out.
Whether by legal maneuver, diplomatic pressure, or shifting alliances, the result is clear: China’s nearly three-decade presence at both gateways of the Panama Canal is over.
Beijing threatened a “heavy price.”
Panama answered with government control orders, Western operators stepping in, and a decisive legal ruling that reshaped one of the most important trade corridors in the Western Hemisphere.
For critics who insisted there was “no basis in reality,” the court’s ruling speaks for itself.
