This article first appeared on GuruFocus .
China is asking state-owned companies to pause discussions on new projects in Panama, according to people familiar with the matter, a step that could be part of Beijing's retaliation after Panama's top court voided CK Hutchison Holdings Ltd. ( CKHUF )'s contract to operate two ports along the canal. The guidance could put potential investments worth billions of dollars at risk and includes requests for shipping firms to consider rerouting cargo through other ports if doing so does not result in significant extra costs. China's customs authorities are also stepping up inspections on Panamanian imports such as bananas and coffee, while projects already underway could possibly be affected, though no final instructions have been issued.
The move follows last week's court ruling in Panama that Beijing condemned and which aligned with US President Donald Trump's campaign to curb Chinese influence over strategic infrastructure in the Americas. China, the second-largest user of the Panama Canal after the US, warned earlier that Panama would pay a heavy price for yielding to what it described as American hegemony. The response mirrors actions taken last year after CK Hutchison announced plans to sell its global port assets, including Balboa and Cristobal in Panama, to a consortium led by Terminal Investment Ltd. and BlackRock Inc., a transaction Beijing criticized as bowing to US pressure.
It remains to be seen whether the latest measures would inflict significant economic pain on Panama, given the country's strong trade ties with the US and the relatively small share of its exports destined for China. Rerouting cargo away from the canal could also incur higher costs and delays, potentially limiting the scope of any shift. Panama has withdrawn from China's Belt and Road Initiative, and existing Chinese-backed projects include a $1.4 billion bridge over the canal, a cruise terminal, and part of a metro line. Meanwhile, CK Hutchison is seeking damages through international arbitration and exploring ways to move its ports sale forward, with the full transaction potentially delivering more than $19 billion in cash, although expectations have moderated following the court ruling.
