According to the Financial Times, as cited by Reuters, China has urged Maersk and MSC Shipping (Mediterranean Shipping Company) to shut down their ports in Panama just weeks after they were taken over from Hong Kong-based CK Hutchison, which recently had its port rights revoked.
Maersk and MSC, for their part, have argued that their temporary port rights are necessary to keep trade flowing through the Panama Canal and therefore continue to operate port terminals in Balboa and Cristóbal. Officials from China’s powerful National Development and Reform Commission (NDRC) are reported to have demanded in meetings with Maersk and MSC that the companies immediately cease their port operations. According to the Financial Times, the Chinese representatives also urged the shipping giants “not to engage in illegal activities that harm Chinese business interests and to uphold business ethics and international rules.”
CK Hutchison had its port rights revoked
In March of last year, CK Hutchison, owned by Hong Kong’s richest man, Li Ka-shing, sold its non-Chinese port operations to BlackRock and MSC, including the ports in Panama in question. In January, however, Panama’s Supreme Court ruled that CK Hutchison’s concession to operate the two sold ports was unconstitutional and revoked the company’s port rights. CK Hutchison subsequently sued Maersk and has filed a $2 billion claim for damages against Panama. As a result of the court ruling in January, MSC and Maersk were granted temporary operating rights for port operations in Balboa and Cristóbal.
The Battle for Global Supply Chains
China’s increasingly aggressive stance should be viewed in the context of U.S. efforts to expand its influence over the canal and is seen as an escalation in an ongoing dispute over Panama’s port concessions. At the same time, a broader global struggle is underway for control over and security of critical global supply chains. Another example of China’s stance is the new regulations introduced earlier in April that make it illegal to, as stated, “harm the security of the country’s industrial and supply chains,” with Chinese authorities also threatening to impose travel bans from China on anyone deemed to be violating the rules. Last week, authorities also introduced regulations to counter what they describe as “unjustified extraterritorial jurisdiction by foreign governments,” as reported by Supply Chain Effect. This gives Chinese authorities greater leeway to scrutinize foreign companies and take retaliatory measures in areas such as trade, investment, and international cooperation.
