Panama is paying a price for being caught up in the power competition between China and the United States.
In January this year, under great pressure from Washington, the Panamanian Supreme Court ruled to revoke the operating rights of Hong Kong's Chia Ling & Co. over two ports located at both ends of the Panama Canal.
The Wall Street Journal analyzed on July 30th that currently, China is exerting pressure on Panama through a series of measures, disrupting its crucial shipping industry and thwarting Panama’s ambitions to become a global logistics hub.
Reports indicate that shortly after the ruling was issued, Chinese authorities began to inspect and detain Panamanian ships.
Trump administration officials stated that these disturbances affected American exporters, consumers, and US strategic interests alike.
Regarding this, Lin Jian, a spokesperson for the Chinese Ministry of Foreign Affairs, pointed out that statistics from Chinese authorities show that since the beginning of this year, Panamanian-registered ships have experienced several serious accidents in waters under Chinese jurisdiction. Panama is the flag state with the highest proportion of such accidents. From January to July this year, Panamanian-registered ships accounted for nearly 20% of all foreign-registered ships arriving at Chinese waters, and the proportion of ship accidents and deaths/suicides reached approximately 50%.
Lin Jian emphasized that port state inspections, as an important measure to ensure the safety of ship navigation and the cleanliness of water environments, are the main means by which countries manage the safety of foreign ships entering their ports. China attaches great importance to maritime traffic and personal safety. Conducting port state inspections on ships docking in Chinese ports in accordance with laws and regulations is fully in line with international conventions.
Meanwhile, Changjiang & Co has filed a claim with an international arbitration institution, asking Panama to pay $2 billion in compensation. The company believes that being forced out of port operations has damaged Panama's reputation as a reliable investment destination.
The Chinese Ambassador to the United States and Observer to the Organization of American States, Xie Feng, recently stated in a speech in Panama in a rarely tough manner that it is obvious to anyone who pays attention that there is political manipulation behind this.
"If the contract wants to be broken, then it should be broken. If market rules are not followed, then they should not be followed. If assets want to be taken over, then they should be taken over. If the operators say expulsion, then expulsion should happen. Who will still invest? Who will still cooperate?"
Panama Foreign Minister Javier Martínez-Acha also argued that Panama has sovereignty over its ports and defended the country's judicial independence.
He and senior officials from Panama have held talks with the Chinese side, hoping to ease tensions before an important test arrives—whether China will renew the maritime agreement that grants preferential treatment to Panamanian vessels at ports.
This is a tense moment for Panama. Chinese shipping giant CSC Shipping has suspended cargo transportation to the Port of Balboa. This port was once operated by Changjiang & Co., and it is an important node in Panama's logistics system, with thousands of containers being transferred between global routes here every month.
On March 9th this year, the Chinese Ministry of Transport revealed that representatives from shipping giants Maersk Group and Mediterranean Shipping Company have been interviewed. The Panamanian government has hired agencies of these two companies to take over the operation and management of the Port of Barbados and Port of Cristóbal for 18 months during the process of finding new long-term operators.
A person familiar with the details of the meeting said that the information sent from China to both companies is: “Don’t harm Chinese enterprises' interests.”
