- China is reportedly investigating a Hong Kong company’s $19 billion deal to sell ports in the Panama Canal to BlackRock. The deal has been celebrated by President Donald Trump.
- Hong Kong Chief Executive John Lee said concerns about the deal “deserve serious attention.”
- In the wake of criticism, Hong Kong company CK Hutchison canceled press and investor calls planned around its earnings report this week. The company’s stock dropped 5% on news of the investigation.
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China is pushing back against a business deal that would cede control of major Panama Canal ports to an American business. Control of the major trade route has been a point of contention for President Donald Trump since taking office.
“China is operating the Panama Canal,” Trump said during his inaugural address in January. “And we didn’t give it to China. We gave it to Panama, and we’re taking it back.”
The details behind the deal
Earlier in March, Hong Kong-based conglomerate CK Hutchison agreed to sell a large chunk of its port business to American investment giant BlackRock in a deal worth $19 billion. The deal would allow BlackRock to control two major ports on either side of the Panama Canal.
President Trump lauded the deal 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 in the speech on March 4. “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.”
Hong Kong and China push back
But 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.
Meanwhile, Chinese authorities are investigating CK Hutchison’s sale to BlackRock, according to a report from Bloomberg. Studying the deal for any possible security breaches or antitrust violations is reportedly at the heart of the investigation.
China previously condemned the deal, warning that the transaction would severely affect its influence over crucial shipping routes. Last week, Ta Kung Pao, a Hong Kong newspaper owned by the Chinese government, ran a piece criticizing the sale. The post was republished to a Chinese government agency’s site that oversees Hong Kong policy.
“The United States will definitely use it for political purposes and promote its own political agenda,” it reads. “China’s shipping and trade here will inevitably be subject to the United States.”
Can China stop the deal?
It’s unclear what the Chinese government could do to stop the deal. The ports in question are outside of both China and Hong Kong. But after facing criticism from Beijing, CK Hutchison decided against holding press and investor calls this week around its earnings report. The company’s stock fell 5% on news of an investigation.
