“CNBC” reported on Wednesday (4th) that Chinese officials have recently strongly criticized the Panamanian Supreme Court’s ruling, warning that Panama will “inevitably pay a heavy price” if it does not change its direction. The move came shortly after Panama’s Supreme Court ruled to revoke the operating licenses of companies owned by Hong Kong’s Cheung Kong Hutchison Holdings (00001-HK) at ports at both ends of the Panama Canal. The ruling is widely regarded as a major victory for US President Trump in the security layout of the Western Hemisphere.
The White House has made blocking China’s influence in the Panama Canal one of its policy priorities in recent years. Panama’s Supreme Court recently ruled that the Panamanian Ports Company’s (PPC) operating contracts at the ports of Balboa on the Pacific coast and Cristoba on the Atlantic coast violated the country’s constitution.
China warns Panama ‘will pay a heavy price’
The Hong Kong and Macao Affairs Office of the State Council of China published a comment on its WeChat official account on Tuesday, describing the ruling as “logically absurd” and “completely untenable” and stating that the Chinese government and the Hong Kong SAR government opposed it. The agency also warned that the Panamanian authorities should “recognize the situation and change course”, otherwise if they insist on going their own way, they will “inevitably pay a heavy price” at the political and economic levels.
This statement was seen as an escalation of China’s response to the ruling. Earlier, a spokesperson for the Chinese Ministry of Foreign Affairs stated that the decision violated Panama’s legal provisions for approving relevant franchises and that the Chinese company would reserve all rights, including legal action. China also stated that it will take all necessary measures to safeguard the legitimate rights and interests of Chinese companies.
CK Hutchison files arbitration requesting huge compensation
Since the 1990s, Panama Ports has been responsible for operating important ports at both ends of the Panama Canal. The company also stated that the court ruling was inconsistent with the relevant legal framework. CK Hutchison announced on Wednesday that it had officially launched international arbitration proceedings over Panama’s revocation of its port operating license.
CK Hutchison said in a statement that Panamanian Ports would seek “large-scale compensation” in response to the ruling, but did not specify a specific amount. Affected by the news, CK Hutchison’s stock price rose more than 2% on Wednesday, and its cumulative increase this year has exceeded 23%.
The background of this dispute stems from the Trump administration’s high concern about the strategic status of the Panama Canal. Trump publicly stated last year that the Panama Canal was “vital” to the United States and accused the waterway of being “actually operated by China.” He once threatened to regain control of the canal, attracting international attention.
