China’s Xi ‘Angered’ by Panama Port Deal Prioritized By Trump

Starting in 2017 Panama signed on with the Chinese government’s Belt and Road Initiative. This prior deal required the Panamanian government to recognize Taiwan as part of China, which of course runs afoul of Washington foreign policy.

Beijing was alarmed when President Donald Trump hailed a deal led by US firm BlackRock to buy most of the $22.8 billion ports business of Hong Kong conglomerate CK Hutchison. This includes assets along the historic canal. The White House under Trump has all the while been very vocal from the start about what it’s described as removing Chinese ownership.

On Tuesday Chinese leader Xi Jinping is said to be ‘angry’ about the plan, especially as BlackRock didn’t seek Beijing’s approval in advance.

The Wall Street Journal in a fresh report says, “The Xi leadership had originally planned to use the Panama port issue as a bargaining chip in negotiations with the Trump administration, according to people close to Beijing’s decision-making, only to see the rug pulled out from under it.”

The apparent cooperation of Panama in Trump’s vision to ‘reassert’ American control over the vital trade waterway has been characterized in Chinese state media in recent weeks as a ‘betrayal’ of the Chinese people.

According to the the fresh WSJ analysis:

In Beijing, several Chinese authorities including the State Administration for Market Regulation and the Ministry of Commerce have been told to study the deal with the aim of reviewing what Beijing can do to hinder it, according to a person familiar with the matter. Bloomberg earlier reported the Beijing authorities’ review.

Despite Beijing’s unhappiness, it doesn’t have a simple way to halt the deal. The assets to be sold are all outside mainland China and Hong Kong, and the parties to the transaction have expressed confidence that it can be completed.

The deal puts Xi in a tricky position. On one hand, Beijing has had to make clear its anger over the Hong Kong company’s move, which came without advance notice, to protect Xi’s strongman image, the people close to decision-making said. On the other, they said, Beijing is aware that any significant effort to torpedo the deal risks escalating tensions with the Trump administration. So far, China has been relatively restrained in its retaliation against Trump’s new tariffs on China, suggesting its desire to keep tensions under control.

In early February, as the White House was first revealing what would be a series of hard-hitting foreign policy reversals (from Biden), the US State Department asserted: “Trump has made a preliminary determination that the current position of influence and control of the Chinese Communist Party over the Panama Canal area is a threat to the canal.”

Trump also told Congress, ”My administration will be reclaiming the Panama Canal, and we’ve already started doing it.” Even on his inauguration address, he said, ”China is operating the Panama Canal” – in a  reference to the Hong Kong company CK Hutchison’s role there.  

Xi’s government has meanwhile admitted that it is not in a strong position in Panama. Beijing has viewed the Hong Kong company as acting outside of the mainland’s interest, setting up for a tricky standoff indeed.