China has warned Panama it will pay a “heavy price” for its decision to force a Hong Kong billionaire to give up control of its canal ports following threats from Donald Trump.
Chinese officials from the Hong Kong and Macao affairs office said a Panama supreme court decision to cancel a contract to operate two ports was “shameful and pathetic” and warned of “heavy prices both politically and economically” for the country.
Hong Kong’s CK Hutchison, which is owned by billionaire Sir Li Ka-Shing, was removed as the owner of the ports shortly after the US president threatened to seize control of the waterway.
The removal came after Panamanian judges revoked the Hong Kong company’s contract to run the Balboa and Cristóbal ports at each end of the canal, declaring it “unconstitutional”.
On Wednesday, CK Hutchison announced the start of arbitration proceedings against Panama, further escalating tensions.
CK Hutchison is owned by billionaire Sir Li Ka-Shing – Vincent Yu/AP
Panama’s ruling came after Mr Trump repeatedly warned that the US could seize the Panama Canal, refusing to rule out military force to take control of the link between the Atlantic and the Pacific oceans.
The US president had complained of “rip-off” fees and growing Chinese influence over the trade route, which allows $270bn (£197bn) of global shipping to pass through its waters each year.
The US paid for the construction of the canal more than a century ago before handing it over to Panama in 1999.
Panama’s decision to bow to US wishes has been seen as a victory for the White House’s “Donroe Doctrine”, which seeks to exert America’s influence over its neighbours.
Donald Trump has repeatedly warned the US could seize the Panama Canal – Evelyn Hockstein/Reuters
CK Hutchison has operated two ports on the canal since 1997. It was already in talks to sell its ports division in a $23bn deal to a consortium led by investment giant Blackstone in a bid to fend off criticism of its ownership.
However, that sale apparently angered Beijing, with state media criticising the sale plans as “spineless”.
Chinese officials said: “Panama’s authorities should recognise the situation and correct their course.”
In a statement with the Hong Kong Stock Exchange, CK Hutchison said that it “strongly disagrees with the determination and corresponding actions in Panama”.
“The group continues to consult with its legal counsel and reserves all rights, including recourse to additional national and international legal proceedings in the matter.”