The proposed sale of CK Hutchison's Panama ports to BlackRock is under increasing political scrutiny, with worries from China and Hong Kong officials casting doubt over the $19 billion transaction. The deal, which was originally touted as a geopolitical fix, now threatens to become a focal point for growing US-China tensions, according to The New York Times.
Hong Kong leader intervenes
Hong Kong Chief Executive John Lee joined the chorus of concern on Tuesday, saying the deal was worthy of "serious attention." His comments came after Beijing and state-run media have cautioned that the takeover might confer disproportionate US influence over major global trade lanes.
Hong Kong billionaire Li Ka-shing's CK Hutchison had been set to sell most of its Hutchison Port Holdings, including the two big ports on either side of the Panama Canal, to BlackRock. The sale followed after US President Donald Trump complained about CK Hutchison's ownership, asserting that the ports were "operated by China" and a threat to national security. Trump earlier hailed the BlackRock acquisition as a strategic victory for American interests.
Chinese backlash and geopolitical concerns
Beijing has strongly objected to the sale, with Chinese state media contending that it would enable the US to politicise port facilities for political gain. Ta Kung Pao, a Hong Kong-based newspaper owned by the Chinese Communist Party, cautioned that the deal would put Chinese shipping and trade in the hands of American influence.
Although CK Hutchison has not yet made an official statement, the firm's shares dropped close to 3% in the wake of Lee's statement. It has also suspended scheduled press and investor briefings amidst the escalating controversy.
Regulatory uncertainty in Hong Kong
Lee's warning has also sparked speculation on whether Hong Kong authorities would be within their rights to intervene in the deal. Traditionally, mergers and acquisitions between Hong Kong-based firms and foreign companies have not been subject to the degree of regulatory clearance that Lee appeared to suggest.
In contrast to mainland Chinese firms, which require the approval of several state regulators to dispose of assets overseas, Hong Kong firms have generally been subject to more independent legal and economic systems. But since Beijing imposed a national security law in 2020, there has been increasing concern that Hong Kong cannot remain an open global financial centre independent of Chinese political control.
Increasing politicisation of business in Hong Kong
The growing political spotlight on the transaction underscores the more general problem of doing business in Hong Kong amid deteriorating relations between the United States and China. Wang Xiangwei, an associate professor at Hong Kong Baptist University, said "this deal can no longer be regarded as commercial in nature.
"If the tables were turned—if BlackRock was selling its ports to a Hong Kong company—Trump would probably respond aggressively, and Congress would open an investigation," Wang added.
Lee also voiced Beijing's complaint about Trump's aggressive trade policies, accusing him of asking for a "level playing field" in international trade while condemning "coercion and bullying tactics."
Uncertain future for the deal
With escalating tensions and increasing resistance, the future of the CK Hutchison-BlackRock transaction is uncertain. Although the deal had earlier been seen as a solution to U.S. security issues, it now stands the risk of being derailed by political opposition from China as well as uncertainty regarding regulatory interference from Hong Kong officials. With the geopolitics advancing, commercial transactions involving key sectors like port infrastructure are more often caught between the interests of great powers.
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