China Critiques BlackRock’s Proposed Purchase of Panama Canal Ports

China has criticized the plan to sell Panama Canal ports to BlackRock, terming it as a betrayal of the Chinese people and affecting CK Hutchison’s stock value. Experts indicate concerns over regulatory approval and potential political repercussions. The deal, valued at $22.8 billion, raises questions about influence and national interests amid international investment discussions.

China has adamantly condemned the proposal to sell ports within the Panama Canal to the American investment firm BlackRock, labeling the deal as “spineless groveling” and a severe betrayal of the Chinese populace. This strong reaction was articulated in a commentary by Ta Kung Pao, a state-affiliated newspaper, which severely impacted the shares of CK Hutchison (CKH), the Hong Kong-based owner, resulting in a drop exceeding 6% following the commentary’s publication.

Market analysts suggest that concerns among investors regarding the viability of the deal stem from potential objections by Beijing. Dan Baker, a senior equity analyst at Morningstar, remarked that while no official approval from Chinese regulators is necessary—since CKH maintains its stake in existing Chinese ports—external pressures could jeopardize the agreement, leading the market to factor in these risks.

Last week, BlackRock, in collaboration with a consortium of investors, proposed a $22.8 billion acquisition of the Balboa and Cristobal ports, located at the canal’s termini, alongside purchasing CK Hutchison’s controlling interests in 43 additional ports across 23 countries. The involved parties described the transaction as an “agreement in principle.”

In the context of this deal, former U.S. President Donald Trump previously expressed intentions to “take back” control of the Panama Canal, originally handed to Panama in a 1999 treaty negotiated with the United States. He contended that Chinese ownership of selected port operations indicated an increasing Chinese influence over this critical international waterway.

The initial announcement surrounding this substantial sale was perceived as advantageous for CK Hutchison, allowing the conglomerate, backed by the renowned investor Li Ka-shing, to divest a politically sensitive asset while securing significant profits. The company anticipated receiving over $19 billion in cash proceeds from the sale, surpassing previous estimates of the ports’ value.

However, the critical commentary from the state-aligned newspaper could hinder the transaction’s progression, accusing CK Hutchison of disregarding national interests for profit and highlighting the necessity for the company to reflect on its positioning in this significant matter. The Panama Canal, a vital corridor for global trade, was constructed by the United States and is crucial for both trade and military navigation, processing approximately 4% of global maritime trade and over 40% of U.S. container traffic. Since its handover to Panama in 1999, the canal has been managed by Panamanian authorities, despite ongoing concerns regarding Chinese involvement in port operations.

The criticism from China regarding the proposed sale of Panama Canal ports to BlackRock underscores the complexities involving international investment, national interests, and geopolitical dynamics. The commentary has prompted investor concern over the feasibility of the deal. While the acquisition presents significant financial gains for CK Hutchison, it could face substantial opposition from Chinese authorities, potentially jeopardizing its realization. The Panama Canal’s historical and current importance continues to fuel debates regarding its governance and influence.

Original Source: keyt.com