By: Toh Han ShihThe entrance of Chinese state-owned enterprises (SOEs) into CK Hutchison Holdings’ negotiations to sell its global ports signifies a global competition between the US and China for control of much of the world’s shipping destinations. Chinese success, which looks increasingly likely, dovetails with the country’s trillion-dollar Belt and Road Initiative (BRI) to provide infrastructure across the world.The competition for dominance of the world’s shipping is centered on control of 45 ports owned by Hong Kong tycoon Li Ka-shing’s conglomerate in 24 nations including two on the Panama Canal. The stalling of Hutchison’s sale to a US-led consortium is also an indication that after hundreds of years of freewheeling capitalism, “it is a watershed moment for Hong Kong companies. It signifies they are no longer independent,” a former banker who asked not to be named told Asia Sentinel. “Therefore, Hong Kong companies will probably not be allowed to invest in foreign, critical infrastructure.”The original goal of the White House was to remove China and its companies from critical logistics value chains as it relates to the strategic Panama Canal, said Dane Chamorro, head of Global Risk and Intelligence at Control Risks, the international risk consultancy.Several Chinese SOEs, including the country’s largest shipping company Cosco Shipping Corp, are in talks to join a consortium to pay US$22.8 billion for the anchorages, Bloomberg reported on June 13. The US consortium, which originally sought to gain control, is led by BlackRock, a US asset management firm with close ties to Washington, and includes Italian billionaire Gianluigi Aponte’s Terminal Investment Ltd. The seller, CK Hutchison, is a Hong Kong-listed conglomerate controlled by Li.BlackRock and its chairman and chief executive officer (CEO) Larry Fink have a very close relationship with both China and US President Donald Trump, said Andre Wheeler, the CEO of Asia Pacific Connex, an Australian consultancy.“The entry of a Chinese company or investor into the global ports sale complicates the entire transaction,” the former bank official said. “The purpose of the sale is not only for CK Hutchison to exit its international ports, but for the governments who own these ports to rid themselves of Chinese ownership. Many countries are de-risking themselves from China and a Chinese bidder complicates the situation and demands additional due diligence.”Although CK Hutchison announced the ports deal on March 4, it has been stalled by strong opposition from the Chinese government and an investigation by China’s State Administration for Market Regulation (SAMR).The Hong Kong and Macau Affairs Office, China’s office in charge of coordinating with Hong Kong and Macau, on April 28 quoted Kwok Wai-keung, a pro-Beijing member of Hong Kong’s Legislative Council, saying if the BlackRock-led consortium succeeds in acquiring 90 percent of two ports on the Panama Canal plus 80 percent of the other 43, the largely Western consortium would own about 100 ports around the world. If that were to happen, Chinese shipping would face unfair competition, Kwok warned.“There are a number of ‘below the surface’ issues that make me believe that the deal with a Chinese partner will proceed,” said Asia Pacific’s Wheeler. “Chinese SOEs like Cosco will be given a minority stake to placate the US and say ownership of the ports is not in the hands of the Chinese Communist Party,” Wheeler predicted. Ports are a key to the success of China’s Belt and Road Initiative (BRI), Wheeler explained. The BRI is China’s mega-project to forge economic connections with other countries through infrastructure projects like ports and railway.“However, the fundamental difference is that the US looks to ownership whereas China looks to control. This dynamic often gets lost when trying to get a uniform approach to the BRI,” Wheeler pointed out. “In reality, the focus should not be on the ownership or what flag flies over the port but on who the port operator will be.”Even if Cosco has a small share of the consortium but is given operating control, it would give China effective control, Wheeler explained. With 80 percent of world trade being conducted via ports, whoever controls the ports has control over global trade, he added. “This has very little to do with who owns the asset.”One likely scenario is the US gains control of CK Hutchison’s two ports on the Panama Canal, while European and Chinese companies buy the other 43, said the ex-banker, with the others to be sold on a deal-by-deal basis if a Chinese company enters the bid. “The reason is that each port’s government will have to consider its China risk. That is why the deal will be slow and complicated.”If the Panama ports go to some US-led consortium but the rest go to another group with Chinese involvement, it would actually worsen the situation from a US national perspective, since Chinese-controlled port companies already have a commanding presence in this space globally, said Control Risks’ Chamorro. The latest example of this is the mega port inaugurated by Chinese President Xi Jinping at Callao in Peru in November 2024, the largest port on the Pacific coast of South America now.“Of course, Beijing would benefit from that outcome as it would be a huge step forward for their involvement in the global ports sector, even if the two Panama ports weren’t included. They would, in effect, gain a foothold in 40-plus port facilities they didn’t have before. It would make Cosco or whichever Chinese port company the dominant global player,” said Chamorro.“It’s another example of the current US administration not thinking beyond ‘step 1’...what happens next? Well, in this case, you could actually wind up increasing China’s port presence rather than limiting it,” Chamorro pointed out.“The diplomatic twist that hasn’t been reported is that Chinese state-owned entities Cosco and China Merchants are reportedly trying to buy a 20 percent stake in Hutchison Ports (the port subsidiary of CK Hutchison),” wrote Christopher R. O’Dea, adjunct fellow of the Hudson Institute, in an article on the website of the US think tank on February 18.The seller of the 20 percent stake is PSA International, the port company of Singapore, wrote O’Dea. “Cosco achieving part ownership of the company operating key terminals on the Panama Canal would be a post-globalization version of the Cuban missile crisis.”Neither BlackRock nor Cosco replied to Asia Sentinel’s questions.Kicking Huawei out of PanamaOn June 11, the US embassy in Panama announced that the US government would replace Chinese technology company Huawei’s telecommunications equipment installed at 13 sites across Panama with “secure American technology.”“Under President Trump’s leadership, the United States is working to counter the malign influence of China throughout our hemisphere, making the Americas stronger and more secure,” the embassy explained.Responding to a question regarding the US attempt to equip the towers eith US technology, Chinese Foreign Ministry spokesperson Guo Jiakun said at the ministry’s press conference on June 16 that the US has long engaged in surveillance, monitoring, and cyberattacks in Latin America and the Caribbean regions, bringing negative influence to the Western Hemisphere."Latin America and the Caribbean are not anyone's backyard. The US should put away its domineering attitude,” Guo added.Toh Han Shih is a Singaporean writer in Hong Kong and a regular contributor to Asia Sentinel