Introduction

In a surprising pronouncement, President-elect Donald Trump has stirred up controversy by threatening to reclaim the Panama Canal in the name of US national security. This assertion raises critical questions about its potential repercussions for Hong Kong and mainland Chinese companies operating in this vital trade artery.

Reactions from Panama and Concerns for Businesses

Panama has staunchly rejected Trump's aggressive posture, but the implications are vast, particularly for firms like CK Hutchison Holdings, which, founded by the prominent Hong Kong billionaire Li Ka-shing, has been instrumental in operating significant port facilities at both ends of the canal since 1997 through its subsidiary, Hutchison Ports PPC. Analysts warn that should Trump follow through on his threat, the ramifications for these corporations could be dire.

US-China Trade Dynamics

Trump has expressed frustration over what he deems "exorbitant" fees imposed on US vessels by Panama and has raised suspicion over the alleged influence of China on this strategic water route. Notably, a study published by the U.S. Chamber of Commerce indicates that the US is the canal's largest user, with China ranking second, and a substantial portion of trade between Northeast Asia and the US East Coast transits through this corridor.

Expert Opinions

Reactions from experts highlight a concerning trend. Wilson Chan Wai-shun, an international relations specialist, noted that criticism of Chinese corporate presence in Panama dates back to the early 1990s, insinuating that China's growing control over such strategic locations could provoke formidable responses from the US government. Should the Trump administration press Panama to annul the long-standing contract with Hutchison Ports, Chan warns that it would send shockwaves that may hinder Hong Kong corporations' capacity to secure infrastructure investments globally.

Historical Context of the Canal

Looking back at the canal's history, it was first controlled by the United States, transitioning to joint governance with Panama before being fully relinquished to Panamanian authorities in 1999. Trump’s fixation on regaining control is perhaps reflective of his broader America First agenda, yet experts remain skeptical of the practicality of such ambitions, particularly given the potential fallout for US relations with its Latin American partners.

Counterarguments from Canal Administrator

Canal administrator Ricaurte Vasquez has strongly refuted Trump’s assertions, stating that Chinese influence is negligible. Furthermore, prominent Chinese corporations, such as the Landbridge Group—which gained significant assets through a $900 million acquisition in 2016—play a crucial role in the canal's logistical framework.

Hutchison Ports and Historical Denials

As for Hutchison Ports, it refrained from commenting on matters concerning the canal; however, historical context is essential here. In 1999, Li Ka-shing firmly denied that Hutchison’s operations could amount to control over the canal. He reaffirmed that their role was strictly limited to managing container terminals, a point echoed by former President Bill Clinton, who dismissed concerns regarding Chinese operations in the canal.

Conclusion

The overarching sentiment from experts like Johnny Lau Yui-siu is that Trump’s threats may be more rhetorical than substantive, intended to rally American support domestically rather than to instigate real policy shifts. Nonetheless, the specter of deteriorating US-China relations and the increasing trade tensions pose a legitimate concern for Hong Kong, as they risk blurring the lines between businesses perceived as Hong Kong-based and those seen as part of mainland China.