Why is China angry with a plan to sell two ports on the Panama Canal? | Commercial and economic news

CK Hutchison, one of the largest conglomerates in Hong Kong, announced earlier this month its intention to sell its participation in two ports on the Panama canal in a group of American investors led by Blackrock.

The plan, which is part of a megadel of $ 22.8 billion which would control the consortium on more than 40 ports in 23 countries, followed the complaints of the President of the United States, Donald Trump, that the main shipping route was under Chinese control.

The actions of CK Hutchison soar after the news of the agreement on March 4, but plunged less than two weeks later when your Kung Pao, a Chinese newspaper managed by the State in Hong Kong, accused the company in two praise of “groveling without spin” and of concluding an agreement “which betrayed and sold all Chinese”.

With a deadline of April 2 to sign the looming agreement, CK Hutchison is now in the Washington and Beijing reticle.

Why would China want to stop the agreement?

The editorials of your Kung Pao, controlled by the Beijing Liaison Office in Hong Kong through a subsidiary, are often read as signals from the higher ranks of the Chinese Communist Party.

Hong Kong chief John Lee, who was elected the sole candidate in an election closely controlled by Beijing, criticized the CK Hutchison agreement, saying that he deserved “serious attention”.

The Wall Street Journal earlier this month reported that the anger of the agreement has extended to the Chinese President Xi Jinping.

Citing anonymous sources familiar with the issue, the newspaper said that XI was angry that CK Hutchison did not ask for its approval for the agreement and that it hoped to use the ports of the Panama Canal as a negotiation currency with Trump, which has committed to “resume” the strategically important waterway.

On Friday, the Chinese market regulator declared on his official WeChat account that he would carry out an antitrust survey “in accordance with the law to protect equitable competition in the market and protect the public interest”.

After the news, the local media, including the Sing Tao Daily and the South China Morning Post, reported that CK Hutchison would not go with the agreement this week.

What is Beijing’s relationship with CK Hutchison?

The proposed sale has also highlighted longtime tensions between Beijing and CK Hutchison and its 96-year-old billionaire founder, Li Ka-Shing.

The rise of the Li of a refugee of Chinese origin of the continent in the Hong Kong real estate magnate holds an almost mythical status on Chinese territory, a former British colony, where it has built its reputation sailing in Western commercial interests and the Communist Party.

Li was known for its close relations with Chinese leaders Deng Xiaoping and Jiang Zemin, who supervised the economic opening of China between the late 1970s and the early 2000s, but its political influence decreased after the rise of XI in the first post in 2012.

In 2015, Li raised the eyebrows when he restructured his commercial interests and recorded them in the Cayman Islands. At that time, he also began to stop from China.

In 2018, Li passed his business control to his son, Victor, but the magnate remained under the spotlight. The following year, Li angry pro-Beijing commentators with his ambivalent comments on the pro-democracy mass demonstrations of Hong Kong at a time when other societies of the city openly criticized the demonstrations.

Although analysts have offered different opinions on the question of whether the family li tacitly supported calls for democracy in Hong Kong, there is a large agreement that it is less visibly pro-Béijing than many other commercial dynasties of the city.

“Compared to other family offices of its generation – such as the Fok and Pao family, which invested in the continent in the 1980s, or the Tung family, which were active in Sino -American relations and the governance of Hong Kong – Li and its sons position themselves as business people who invest in the whole world and at a distance from the policy,” said Wilson Chan, co -founder.

Can Beijing prevent the sale from going forward?

Chan said Beijing is relatively limited in terms of formal regulatory authority to stop the agreement.

“In strict legal terms, it will be difficult for Beijing and Hong Kong to cancel the agreement, since the companies and the ports involved are not” legally “located in the jurisdiction of China and Hong Kong,” he said.

Ronny Tong, lawyer for Hong Kong and member of the city’s executive council, said the antitrust investigation could be considered a “deterrence” against CK Hutchison in the future with the agreement.

Tong said Chinese regulators generally do not intervene to block Hong Kong trade agreements, but have the right to investigate.

“If people are continuing their commercial activities contrary to the law, they should be investigated to see if they have come across the law,” Tong told Al Jazeera.

Experts cited in the South China Morning Post said that Chinese regulators could request legal competence on the agreement by arguing that the BlackRock acquisition of so many ports would give them a monopoly on regional commercial roads.

Prove that the agreement would have an unfavorable impact on competition, however, could be more difficult, while invoking national security problems could be difficult because BlackRock is a private company, said the experts cited by the Post.

Martina Fuchs, commercial correspondent of the Chinese news agency led by the state of Xinhua, said that it expects the agreement to be delayed or canceled because it has become “very politicized”.

“China’s criticism of CK Hutchison’s decision to sell port activity also reflect its strategic interests in the region with one hand, and the growing pressure from US President Donald Trump to limit the influence of China as well as the concerns about the national security of the other,” Fuchs in Al Jazeera told Al Jazeera.

“CK Hutchison is pushed into the reticle in the middle of the China-US trade war and China-United States, the two powers war, the two powers were fighting for the control of the strategic navigable track,” she said.

What other pressure can it apply?

Even without going through official legal channels, Beijing could exert pressure in other respects.

The affiliated companies of CK Hutchison and commercial interests on the continent are a point of vulnerability, according to an analyst which covers the economy of China, which spoke under the cover of anonymity due to the political sensitivity of the question.

While CK Hutchison decreased its investment in China, it still earns around 12% of its income from China – representing more than $ 300 million in 2024.

His sister company, CK Asset Holdings, still has dozens of properties in continental China, which means that it is also very exposed to Beijing, the analyst said.

Hong Kong’s foreign and local companies will wait closely to see what will happen next, he said.

“The larger family group of companies always has a significant amount of assets on the continent, such as the property of CK Asset. They are almost certainly aware that they could be exposed to Beijing reprisals,” said the analyst.

Kevin Yam, a lawyer specializing in financial services and trade disputes until he left Hong Kong in 2022, said Beijing could use the agreement to make an example of the Li family, just like the founder of Alibaba, Jack Ma.

After criticizing Chinese regulators in 2020, MA was forced to cancel the IT Financial’s IPO, a financial subsidiary of Alibaba.

Since then, it has rarely been seen in public.

“Hong Kong being Hong Kong, there is a good chance that they do not cut the Li family to the size to the same extent as for Jack Ma, but I think that in the end, whatever this thing will go … It will not be directly the agreement,” said Al Jazeera, who is sought by Hong Kong about his participation in the demonstrations of 2019, in Al Jazeera.

Beijing has not avoided using extrajudicial methods against eminent citizens in the past.

In 2017, the Chinese Canadian businessman Xiao Jianhua – then one of the richest people in China – disappeared from the luxury hotel where he lived in Hong Kong, with several media reporting that he had been kidnapped by continental Chinese agents.

The exact fate of Xiao remained unknown for five years until 2022, when a Shanghai court sentenced the magnate to 13 years’ imprisonment for having allegedly diverted $ 8 billion.

In 2023, Bao Fan, a banker influencing Chinese technology, went beyond in the repression of the financial services industry.

Bao, whose company announced its resignation last year, has not been heard publicly since.

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What is the next step for the CK Hutchison agreement?

With only one day to be traveled until the deadline of April 2, the fate of the sale is not clear.

While Chinese regulators examine the agreement, the government of Hong Kong has not yet investigated, according to Tong, which is in the cabinet of the Director General of Hong Kong.

On the Chinese continent, the government seems to use both carrot and stick.

Last week, Li Richard’s son was invited to China Development Forum, a high -level commercial summit held every year in Beijing.

Although Richard is not involved in the management of CK Hutchison, the markets interpreted its invitation as a positive sign for business relations with Beijing, sending its shares 3.4% higher last Monday.

On Thursday, however, Bloomberg reported that Beijing had published a directive to public enterprises to hold new cases with CK Hutchison and its affiliates, citing people familiar with the problem.

Although he is still not sure if CK Hutchison and Blackrock will continue with the agreement, a delay would not necessarily stop him on his traces.

The agreement would include an exclusivity clause of 145 days for negotiations, after which CK Hutchison would be free to sell its assets to another part, according to the post.

The position said that none of the parties had revealed “the beginning or end” of the exclusive period.

Tong said it was difficult to say more without the official word of CK Hutchison or BlackRock.

“Very few facts are known to the public,” he said. “(CK Hutchison) keeps mom, says nothing at all, so that people can only venture to guess what’s going on.”