- BlackRock’s purchase of ports on either end of the Panama Canal is on hold amid a Chinese government investigation. The deal was lauded by President Donald Trump after it was announced earlier this month.
- The Trump administration has claimed Chinese control of Panama Canal ports is a national security concern.
- China warned BlackRock’s purchase could hurt its influence over trade routes.
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BlackRock’s $23 billion acquisition of dozens of ports, including two on either side of the Panama Canal, is on hold after the Chinese government opened an investigation into the deal.
Hong Kong conglomerate CK Hutchison agreed to sell large shares of its port business to BlackRock on March 4 for approximately $22.8 billion.
What has the Trump administration said about the deal?
President Donald Trump lauded the deal, mentioning the acquisition during an address to a joint session of Congress.
“My administration will be reclaiming the Panama Canal, and we’ve already started doing it,” Trump said at the time. “Just today, a large American company announced they are buying both ports around the Panama Canal and lots of other things having to do with the Panama Canal and a couple of other canals.”
The Trump administration argued Beijing could use ports controlled by Chinese companies as a “choke point” against America.
“If these companies control both ends of that canal in a time of conflict, and the Chinese tell them, ‘Shut it down and don’t let the U.S. go through there,’ we’ve got a big, big problem,” Secretary of State Marco Rubio said during confirmation hearings in January. “A big economic problem and a big national security and defense problem.”
Why is China investigating the deal?
China’s State Administration for Market Regulation opened an investigation Friday into whether the deal violates the country’s anti-monopoly laws. China was said to be scrutinizing the deal for the last several weeks.
BlackRock had hoped to have the deal finalized this week. But Hong Kong-based CK Hutchinson wasn’t planning to sign the deal this week, according to a report from CNBC, citing people with direct knowledge of the matter.
After initial reports of it facing criticism from Beijing, CK Hutchison decided against holding press and investor calls around its earnings report.
China previously condemned the deal, warning that the transaction would severely affect its influence over crucial shipping routes.
Hong Kong Chief Executive John Lee shared his concerns about the BlackRock deal and its impact on Hong Kong on Tuesday, March 18.
“These concerns deserve serious attention,” Lee said of scrutiny over the deal.
It’s still unclear how long China will be able to hold up the deal as all of the ports sold to BlackRock are outside of Hong Kong and China.