Panama Pushes Back as Beijing Warns of ‘Heavy Price’ in Canal Ports Dispute

— Panama’s President José Raúl Mulino has forcefully rejected China’s warning that the Central American nation would face severe political and economic consequences after authorities annulled a long‑standing port concession held by a Hong Kong–based company on the Panama Canal.

Panama Defends Judicial Independence Amid Rising Geopolitical Tensions

In a statement posted on social media, President Mulino said he “strongly” rejected the threat issued by China’s Hong Kong and Macao Affairs Office (HKMAO), insisting that Panama “upholds the rule of law and respects the decisions of the judiciary, which is independent of the central government.”

The dispute erupted after Panama’s Supreme Court invalidated the concession granted to CK Hutchison, a Hong Kong‑based conglomerate that has operated the Cristóbal and Balboa ports—strategic terminals on the Atlantic and Pacific ends of the canal—since 1997. The court ruled the contract “unconstitutional,” citing terms that disproportionately favored the company and undermined Panama’s national interests.

China Condemns Ruling, Accuses Panama of Yielding to U.S. Pressure

Beijing reacted sharply to the court’s decision. The HKMAO described the ruling as “absurd” and “shameful,” warning that Panama would “pay heavy prices both politically and economically” if it did not reverse course.

China’s Foreign Ministry spokesperson Lin Jian accused the United States of exerting “Cold War mentality and ideological bias,” arguing that Washington was pressuring Panama to curb Chinese commercial influence in the region.

U.S. Influence Looms Large Over the Canal Dispute

The ruling follows months of pressure from U.S. President Donald Trump, who has repeatedly criticized China’s presence near the canal and even threatened to seize control of the waterway, calling it “vital” to U.S. national interests.

After Trump’s warnings last year, Panama’s comptroller general launched a review of CK Hutchison’s contract, ultimately recommending its annulment. The Supreme Court’s decision aligned with that recommendation, concluding that the concession posed risks to Panama’s sovereignty and financial stability.

Temporary Management and the Future of the Ports

Following the court’s ruling, the Panamanian government appointed Danish shipping giant Maersk to temporarily manage the port terminals until a new concession process is established.

The ports, which handle significant volumes of global trade and nearly 40 percent of U.S. container traffic, have become a focal point in the broader geopolitical contest between Washington and Beijing for influence in Latin America.

A Symbol of a Larger Strategic Struggle

The CK Hutchison concession has long been viewed as a symbol of China’s expanding economic footprint in the region. Its annulment is widely seen as a strategic victory for the United States, which has sought to limit Chinese involvement in critical infrastructure across the Western Hemisphere.

China, however, maintains that it will “firmly defend the legitimate and lawful rights and interests” of its companies and has signaled it may pursue further diplomatic or economic measures in response.

Panama Stands Firm

Despite the escalating rhetoric, President Mulino emphasized that Panama’s actions were grounded in constitutional principles, not geopolitical alignment.

“The decisions of our courts are sovereign,” he said, adding that the Foreign Ministry would issue a formal statement and “adopt the corresponding decisions” in the coming days.

As tensions rise, the canal—one of the world’s most critical maritime arteries—once again finds itself at the center of a global power struggle, with Panama asserting its autonomy amid pressure from two superpowers.