Panama on Wednesday rejected China’s warning that it would pay a “high price” for annulling the contract that allowed a Hong Kong company to operate two ports in the Panama Canal, escalating a dispute unfolding amid the broader contest between Washington and Beijing.
The Chinese government rejected a court ruling that annulled the contract held by the port operator CK Hutchison Holdings, calling it “extremely absurd,” and warned that Panama would pay a “high price” if it did not change course, Bloomberg reported.
“I strongly reject the statement by the Hong Kong and Macao Affairs Office regarding the Supreme Court ruling on the port contract,” Panama’s President José Raúl Mulino said, adding that “Panama is a state governed by the rule of law” and respects judicial decisions.
At a press conference, Chinese Foreign Ministry spokesperson Lin Jian warned Wednesday that his country “will firmly defend the legitimate and lawful rights and interests of Chinese companies.” Without mentioning China, Panama’s Foreign Ministry later said in a statement that the ruling was not “a political or geopolitical decision,” but “strictly legal.”
“Our country maintains a foreign policy based on mutual respect, non-interference in the internal affairs of states, and peaceful coexistence among nations,” it said. The crisis erupted last Thursday when the court annulled Hutchison’s contract, renewed in 2021 for 25 years, on the grounds that the concession was “disproportionately tilted in favor of the company,” without “any justification,” and “to the detriment of the public treasury.”
The canal in dispute
Since arriving at the White House a year ago, President Donald Trump has threatened to retake the strategic waterway built by the United States, claiming it is “under Beijing’s control,” even though it is administered by an autonomous Panamanian public institution independent of the government.
According to the U.S. government, that “control” is exercised by Beijing through Hutchison, which has operated since 1997 the ports at both entrances to the canal: Balboa on the Pacific side and Cristóbal on the Atlantic.
The annulment of the contract was welcomed enthusiastically by Washington. Secretary of State Marco Rubio said last Friday that “the United States feels encouraged.” Referring to that statement, the Chinese spokesperson said that “the words and actions of the United States have once again laid bare its Cold War mentality and ideological bias.”
“The world is very clear about who is trying to seize the Panama Canal by force and undermine international law in the name of the rule of law,” he said.
Appeal
On Tuesday night, Panama Ports Company (PPC), a Hutchison subsidiary, announced it will challenge the Panamanian court’s decision in international forums, though it did not specify what it is seeking. The company accuses Panama of causing it “serious harm” by annulling the concession after “a state campaign” against it.
But Panamanian judges argue the renewal of the contract was carried out automatically without the comptroller’s endorsement and without renegotiating conditions despite growth in the port sector, according to the ruling. After the judicial decision, the Panamanian government announced that Danish company Maersk would temporarily take over administration of the port terminals until a new concession is granted.
The ruling came amid a delayed process to sell the ports that Hutchison announced in March 2025, to cede its stake in the Panamanian terminals to a group of companies led by U.S. firm BlackRock, as part of a package valued at $22.8 billion. The United States, which inaugurated the canal in 1914, and China are the main users of the route, through which nearly 5% of global maritime trade passes.
