The US-China power struggle has brought the Panama Canal back into the spotlight

A a simmering controversy The two container ports at either end of the Panama Canal risk becoming a geopolitical flashpoint between the world’s two largest economies: the US and China.

It is a Controversial decision of the Supreme Court of Panama Cancellation of Hong Kong Subsidiary License CK Hutchison to use the two main terminals on the waterway, through them about 40% transit of all US container traffic annually.

The decision was seen as a major victory for the US, given what the White House had achieved Blocking China’s influence one of its main priorities on the global trade artery.

China has tried to raise the stake in recent days. With the strongest rebuke from Beijing warned said on Wednesday that the Central American country would “certainly pay a heavy price politically and economically” if it does not change course.

The Hong Kong and Macao Affairs Office of the State Council of China cited the court decision “logical error” and “absolutely ridiculous.”

In response, Panamanian President Jose Raul Mulino dismissed China’s threats and said Wednesday that he “absolutely does not accept” the statement from the Hong Kong and Macau Affairs Office.

Mill said on social networks Panama says it is a “state of law” that respects the decisions of its supreme court, noting that decisions made by the judiciary are independent of the central government.

CK Hutchison, for its part, said on Wednesday that it had referred Panama to international arbitration, adding that it “totally disagrees with (the court’s) decision.”

Experts predict that the consequences of this decision will last for some time.

According to Scott Kennedy, a senior adviser at the Center for Strategic and International Studies, it looks like “a simple competition for dominance in Latin America” ​​because of the security risks posed by CK’s port management and questions about whether there are any mitigation measures in place.

“The most likely scenario is a protracted legal battle in multiple jurisdictions with considerable political and economic pressure from Beijing and Washington,” Kennedy added.

Relations between the two powers soured last year when President Donald Trump imposed massive tariffs on Chinese exports, prompting Beijing to tighten controls on rare earth exports. Geopolitical tensions such as Beijing’s stance on Taiwan, Russia’s support for its war in Ukraine and US military action in Venezuela and Iran have also weighed on the relationship.

CK Hutchison reached a $23 billion deal with a BlackRock-led consortium in March last year to sell its non-Chinese port subsidiaries. The deal was later criticized by Beijing “pull” to American pressure.

Chinese officials have tried to change the agreement, demanding changes It will go through China’s unification review process and was reported to have offered Cosco is a state transportation group joining a buying consortium.

China as a sign of further escalation directed state-owned firms called for a halt to negotiations on new projects in Panama, Bloomberg reported Thursday, and asked shipping firms to consider rerouting cargo through other ports.

According to Bloomberg, China’s customs authorities also plan to increase inspections of Panamanian imports, including bananas and coffee.

Given Trump’s view of the canal as a strategic chokehold, the chances of any response from Beijing pushing Panama back remain low, said Jack Lee, an analyst at China Macro Group.

China’s response will be carefully calibrated and likely to be symbolic, aimed at expressing disapproval rather than forcing policy change, Li said, adding that the Panama episode exposed Beijing’s vulnerability in protecting its economic interests in the region while resisting US pressure.

China has increased investment in strategic infrastructure across Latin America, including a major deep-water port in Peru. The Changkai Portoperated and majority owned by state-owned Cosco, is expected to cut delivery times by about half.

Experts at the Washington-based Foundation for Defense of Democracies, warned The Chinese government “seems to have cornered the maritime industry.”

FDD Elaine K. China controls more than 100 overseas ports on every continent except Antarctica and produces 95% of shipping containers and 70% of ship-to-shore cranes, Dezenski and Susan Soh said in their paper published on Monday.

China dominates world shipbuilding orders, with two-thirds of global orders going to Chinese yards by 2025. industry reportCiting data from marine research firm Clarksons.

Around this time 40% of US container traffic annually passes through the Panama Canal, which transports about 270 billion dollars a year in cargo.

Any expansion of Beijing’s maritime dominance could threaten the US and its allies’ dependence on important minerals and rare earths, FDD said.

Recently, the Secretary of the United Nations Antonio Guterres called US and China power strugglewarned that global problems “cannot be solved by one force”.

At a January 29 press conference, Guterres said: “What we see, and what many see in the future, is that there are two poles, one in the United States and the other in China.”

“If we want a stable world, if we want a world where peace can be maintained, development can be shared and ultimately our values ​​prevail, we must support multi-polarity,” he added.