China’s Reaction to CK Hutchison’s Mega Ports Sale and its Implications for Foreign Business

In early March, the ports world specifically and the critical infrastructure and transportation worlds more generally were rocked by the news that CK Hutchison (CHK) had struck a nearly $23 billion deal with a consortium headed by BlackRock.  Per the terms of the sale, CKH will sell BlackRock “all of its operations in Panama as well as its 80 percent effective and controlling interest in 43 ports comprising 199 berths across 23 countries globally.”[1]  The conglomerate’s massive unloading of its port holdings has generated much commentary about its motivations, the prospects for China’s Belt and Road Initiative (BRI), of which ports are no small part, China’s future footprint in Latin America and the Caribbean (LAC), American power and image gains and corresponding Chinese losses, and, of course, implications for ports worldwide.[2]  For some, the dynamics of the deal and its ultimate closure (or not) lack broader implications for companies outside the aforementioned sectors.  The reverse actually is the case.  As will be shown, what transpires has implications for foreign businesses in or dealing with the People’s Republic of China (PRC) that require serious consideration by corporate Boards and management.

In Mid-March, Hong Kong’s Ta Kung Pao, a government linked paper, lambasted the sale in a commentary that was reposted on a Hong Kong and Macao Chinese Communist Party and PRC Hong Kong and Macao government office website, implying some degree of central government approval.  Among other things, it warned of negative consequences for Chinese shipping and trade, implied CKH was “‘groveling,’” “‘overlooking national interests,’” as well as “‘betraying the Chinese people,’” and suggested CKH should “‘think twice.’”[3]  Not long afterwards, Ta Kung Pao published another harsh opinion piece questioning the patriotism of CKH’s owners, the Li Ka-shing family, which was posted on the aforementioned website as well as another official website.[4]  Following this, Hong Kong’s Chief Executive observed the deal deserved “‘serious attention,’” though he did not criticize it.[5]  The negative rhetoric has raised questions about Beijing’s thinking and the actions that it ultimately may take given there appears no regulatory need for it to approve the sale.[6]  A piece in the Wall Street Journal suggests that China’s adverse reaction has something to do with CKH’s failure to obtain Beijing’s pre-approval for the sale, Beijing’s plan to use Panama ports as a bargaining chip in its negotiations with the President Donald Trump administration, and a feeling the sale makes Beijing look like a loser while making Washington, in contrast, appear a winner.[7]

Other than the derisory rhetoric, Beijing has issued a directive ordering “state-owned firms to hold off any new collaboration with businesses linked to Li Ka-shing and his family,” though the order does not affect existing business dealings.[8]  On March 28, China’s State Administration for Market Regulation said it would review the deal “‘in accordance with the law to protect fair competition in the market and safeguard the public interest.’”  In the face of all of this, the finalization of the deal was put off, though the deal has not been, as of this writing, terminated.[9]  There are many economic reasons for the Hong Kong conglomerate and the Li family (not to mention personal ones for the latter) to be concerned about the PRC’s potential leverage over it.  This said, a large percentage of the firm’s revenues and profits result from business dealings outside China, affording it some measure of independence from external pressure.  What concerns us, though, are the implications for foreign businesses outside of the immediate sectors at interest.[10]

If Beijing scuttles the deal through pressure on CKH and/or the Li family, this suggests all infrastructure outside China involving Chinese firms is politicized to some degree, undermining the PRC government’s claims that such projects are commercial endeavors.  This raises issues for those making use of or involved in such infrastructure.  It also implies that Hong Kong and mainland Chinese businesses must consult with Beijing on all sensitive and perhaps even all large-scale deals, which means foreign businesses should be cautious about assuming that deals will be finalized or that their deal counterparts can fulfill the terms of any deals struck.  Relatedly, it magnifies the commonsensical point that American and Chinese companies must devote adequate attention to their political overlords’ perceptions of gains and losses given the state of PRC-United States (US) relations and the intense competition between their home governments.  Lastly, any blockage of the deal would dilute Beijing’s message that it is “open for business,” a signal it has been actively trying to make over the past month or so.

Even if Beijing lets the deal steam ahead, there still are many relevant lessons for foreign businesses.  One is that foreign firms considering deals or dealings with PRC or Hong Kong counterparts will have to spend time identifying not only the Chinese government’s latest sensitivities, but the sensitivities of the top Chinese leaders.  Relatedly, they will have to contemplate ways to address those sensitivities.  This may entail changing the terms of a deal or pairing one deal with another that offers gains to offset any losses, perceived and real (such “compensation” certainly is not visible with respect to CKH’s blockbuster transaction with BlackRock).  Deal timing also is critical.  Initiating or moving forward on a deal at a sensitive time—e.g., an election, leadership shift, internal instability, or period of highly public confrontation—only risks the deal running aground on domestic politics, status concerns, and the like. 

Image: Panama Canal (courtesy of Family collection of Infrogmation of New Orleans, CC BY-SA 4.0)

[1] Kenji Kawase, “China Signals Anger at CK Hutchison’s Panama Ports Sale, Rattling Investors,” Nikkei Asia, March 14, 2025, https://asia.nikkei.com/Politics/International-relations/US-China-tensions/China-signals-anger-at-CK-Hutchison-s-Panama-ports-sale-rattling-investors.

[2] Juliana Liu, “Panama Canal,” CNN, March 14, 2025, https://edition.cnn.com/2025/03/14/business/panama-canal-sale-china-criticism-intl-hnk/index.html; Zhang Shidong and Cao Li, “Criticism May Stop Li Family’s Port Sale,” South China Morning Post, March 15, 2025, B1; and Toh Han Shih, “Sino-US Tensions Heat Up over Canal Sales,” Asia Sentinel, March 15, 2025, https://www.asiasentinel.com/p/china-usa-tensions-over-suez-canal-sales.  For a detailed discussion of the deal’s implications for ports, see John Bradford and Isaac Kardon, “American Consortium’s Purchase of Hong Kong-Owned Port Terminals has Implications Far Beyond Panama,” RSIS IDSS Paper, no. 26 (March 10, 2025), https://rsis.edu.sg/rsis-publication/idss/ip25026-american-consortiums-purchase-of-hong-kong-owned-port-terminals-has-implications-far-beyond-panama.

[3] Kawase, “China Signals Anger at CK Hutchison’s Panama Ports Sale, Rattling Investors” (March 14, 2025); Chan Ho-him, “China Urges CK Hutchison to ‘Think Twice’ on Panama Ports Deal,” Financial Times, March 14, 2025; and Jeffrey Lam, “Hutchison Deal Called a ‘a Betrayal,’” South China Morning Post, March 14, 2025, A5.

[4] Kenji Kawase, “China Ramps Up Attacks against Li Ka-Shing’s Panama Canal Deal,” Nikkei Asia, March 16, 2025, https://asia.nikkei.com/Politics/International-relations/US-China-tensions/China-ramps-up-attacks-against-Li-Ka-shing-s-Panama-Canal-deal.

[5] Kenji Kawase, “Hong Kong Chief Says Panama Canal Deal Deserves ‘Serious Attention,’” Nikkei Asia, March 18, 2025, https://asia.nikkei.com/Politics/International-relations/US-China-tensions/Hong-Kong-chief-says-Panama-Canal-deal-deserves-serious-attention.

[6] Liu, “Panama Canal” (March 14, 2025); Zhang and Li, “Criticism May Stop Li Family’s Port Sale” (March 15, 2025); and Chan Ho-him, “CK Hutchison Records Bumper Profits at Ports ahead of BlackRock Deal,” Financial Times, March 20, 2025.

[7] Lingling Wei, Rebecca Feng, and Raffaele Huang, “China’s Xi is Angered by Panama Port Deal that Trump Touted as a Win,” Wall Street Journal, March 18, 2025.

[8] “China Pauses New Deals with Li Ka-Shing Family after Panama Ports Plan,” Japan Times, March 27, 2025, https://www.japantimes.co.jp/business/2025/03/27/companies/china-li-ka-shing-panama-ports; and Kenji Kawase, “China to ‘Review’ CK Hutchison Port as Saga Enters Crunch Time,” Nikkei Asia, March 28, 2025, https://asia.nikkei.com/Business/Companies/China-to-review-CK-Hutchison-port-sale-as-saga-enters-crunch-time.

[9] Kawase, “China to ‘Review’ CK Hutchison Port as Saga Enters Crunch Time” (March 28, 2025).

[10] Kenji Kawase, “CK Hutchison Tilts More to Europe than China, Results Show, Amid Panama Row,” Nikkei Asia, March 20, 2025, https://asia.nikkei.com/Business/Companies/CK-Hutchison-tilts-more-to-Europe-than-China-results-show-amid-Panama-row; and “CK Hutchison,” Reuters, March 20, 2025, https://www.reuters.com/business/ck-hutchison-global-conglomerate-caught-us-china-trade-spat-2025-03-20.