US-China Tensions Escalate as Panama Canal Court Ruling Threatens Chinese Port Operations

Beijing has reacted sharply after Panama’s Supreme Court ruled against a Hong Kong-backed company’s right to operate key ports at the Panama Canal, warning that the decision could carry “heavy political and economic” consequences.

The case centers on CK Hutchison Holdings, a Hong Kong-based multinational that manages terminals at both ends of the canal through its Hutchison Ports business. The Central American nation’s top court deemed the concession unconstitutional, sparking an 800-word rebuke from Beijing’s office overseeing Hong Kong affairs, which called the ruling “truly shameful and pathetic” and accused it of succumbing to US hegemony.

Strategic Stakes for China and the US
The Panama Canal handles roughly 40 percent of all US container traffic annually, making it a critical strategic and economic asset. The ruling is seen as a key test in the broader US push to limit Chinese influence in Latin America and the Caribbean, a cornerstone of former President Donald Trump’s policy to deny non-Hemispheric powers control over vital infrastructure.

China has invested heavily across the region, engaging in trade exceeding half a trillion dollars annually and embedding state-owned enterprises in telecoms, power, and mining sectors. The country’s latest statement affirmed its readiness to protect Chinese enterprises and maintain “a fair and just international economic and trade order.”

The Panama Canal dispute comes as Beijing balances signaling strength to partners perceived as US-aligned, while preparing for an expected visit from Trump later this year, which may offer a chance to stabilize US-China relations.

US Pressure on Panama
Trump’s administration has long pressured Panama over its ties to China, falsely claiming in his inaugural address that “China is operating the Panama Canal” and vowing that the US was “taking it back.” In response, Panama launched an audit of Hutchison Ports’ operations, while President Jose Raul Mulino denied Trump’s assertions.

Experts say the case highlights the intensifying geopolitical struggle for influence in Latin America, with the Panama Canal emerging as a symbolic and economic flashpoint in the US-China rivalry.