Beijing calls Li Ka-shing a 'traitor' in Panama ports deal
Beijing criticized Hong Kong tycoon Li Ka-shing for “betraying all Chinese people” after his flagship company announced its plan to sell most of its global ports, including two at the Panama Canal, to BlackRock.
The Chinese State Council’s Hong Kong and Macao Affairs Office (HKMAO) circulated an titled “Don’t be naive and senile” on its website on Thursday, calling on the 96-year-old entrepreneur to rethink the transaction.
The article said the “big deal” proposed by CK Hutchison, Li’s flagship company, is not ordinary commercial behavioor, as it was announced after US President Donald Trump called for regaining control of the Panama Canal in January.
“After the Panama Canal is ‘Americanized’ and ‘politicized,’ the US will definitely use it for political purposes and pursue its own political agenda,” Wang Junxi – the name may be a pseudonym as the author has no title and has not published any article before – says in the article, citing comments from “many netizens.”
“Once the US implements docking restrictions and imposes ‘political surcharges,’ Chinese companies’ logistics costs and supply chain stability will face significant risks.”
Wang says that, through this transaction, BlackRock will control approximately 10.4% of the world’s container terminal throughput, becoming one of the world’s three largest port operators; the company will probably cooperate with the United States’ suppression policy against China, increase the cost of China’s freight docking, and squeeze the market share of Chinese shipping companies.
“The US may also use this transaction as a model to push for mergers and acquisitions of ports worldwide through political pressure, control more key ports, and use ‘long-arm jurisdiction’ to implement suppression measures, leaving Chinese ships nowhere to dock,” he says.
“Because of this, netizens generally strongly questioned and criticized CK Hutchison and its proposed deal, saying that this was a kneeling, a profit-seeking, a trade of integrity for profits, a disregard for national interests and national justice and a betrayal of all Chinese people,” he adds. “These emotional expressions from netizens are completely understandable.”
The author says Li should choose the right side in the fight between the US and China.
The article was first published by Ta Kung Pao, a pro-Beijing newspaper in Hong Kong, on Thursday, following the closure of China’s “two sessions” on Tuesday. The “two sessions” are the annual meetings of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC).
Huge docking fee
In his inauguration speech on January 20, Trump said it was time for the US to retake control of the Panama Canal. He blamed former US President Jimmy Carter for signing the Panama Canal Treaty in 1977 to guarantee Panama would gain control of the Panama Canal after 1999.
Trump complained that the Panama Canal, which has military value, is now controlled by a Chinese company.
He said this because Hutchison Port Holdings (Hutchison Ports), a subsidiary of the Hong Kong-listed CK Hutchison, started operating the ports of Balboa and Cristobal at both ends of the Panama Canal in 1997. In 2020, the US terminated Hong Kong’s special status and began treating Hong Kong companies as Chinese.
On January 21 this year, the Office of the US Trade Representative (USTR) launched a public consultation on an ongoing Section 301 investigation on China’s acts, policies, and practices targeting the maritime, logistics and shipbuilding sectors for dominance.
The USTR suggested that China-made container ships be charged a fee of up to US$1.5 million whenever they call on US ports. The public consultation will end on March 24.
On March 4, CK Hutchison said it had agreed to sell its entire 80% stake in Hutchison Ports – which owns, operates and develops 43 ports comprising 199 berths in 23 countries – to BlackRock for US$22.8 billion.
Zhou Mi, a senior research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on March 7 that the United States’ plan to impose fees on China-related vessels is a unilateralist approach that violates World Trade Organization rules.
“This will lead to an increase in logistics costs. US enterprises will likely pass on this price to the downstream, thus increasing US supply chain costs,” he said. “Restricting US firms from using Chinese ships will worsen the imbalance in the United States’ ship fleet and stunt the growth of its shipbuilding industry.”
The Trump administration also imposed a 10% tariff on all imports from China on February 10 and another 10% on March 10, in addition to an existing tariff of about 20% on all incoming Chinese goods.
Besides, on March 12, it imposed a 25% tariff on all steel and aluminium imported into the US, aiming to force metal suppliers to build factories in America.
Deng’s promise
The Qing government ceded Hong Kong Island in 1842 and the Kowloon peninsula in 1860 to Great Britain.
In 1863, two Scottish businessmen established the Hongkong and Whampoa Dock Company (HWD), which is currently Hutchison Ports. In 1977, HWD merged with Hutchison International Ltd to become Hutchison Whampoa, which was acquired by Li in 1979.
After the 1989 Tiananmen Square massacre, Chinese leader Deng Xiaoping told Li in a 1990 meeting that Hong Kong’s freedom and autonomy would remain unchanged for 50 years after the 1997 handover.
However, the situation changed after Chinese President Xi Jinping took office in 2012 and tightened political control in Hong Kong. Li started selling assets in Hong Kong and mainland China.
In September 2015, a think tank under Xinhua published an article titled “Don’t let Li Ka-shing run away!” The article criticized Li for selling assets in China to invest in Europe. The article said Li should not take away all his money from Hong Kong as he had benefited from Beijing’s support for decades.
In August 2016, Victor Li, the elder son of Li Ka-shing, said Cheung Kong could sell all properties in Hong Kong except its headquarters in Central.
After the 2019 protests, Beijing “made perfect” Hong Kong’s election system in March 2021, removing the say in the election that the tycoon had enjoyed as a member of the 1,200-member Election Committee empowered to choose the city’s next chief executive. But now, China’s leadership realizes that Li’s ports have huge strategic value in the Sino-US trade war.
Canada-based Hong Kong commentator Simon Lau says on his YouTube channel that Li could have sold only two ports in Panama, but he decided to sell all, meaning that he is pessimistic about the long-term global trade environment. Lau says Li’s decision seriously upsets Beijing.
Yong Jian is a contributor to the Asia Times. He is a Chinese journalist who specializes in Chinese technology, economy and politics.
Read: US-China on very real collision course over the Panama Canal