Panama faces challenges due to its altered relations with China. Reports show an increase in inspections and detentions of Panamanian-flagged ships by Chinese authorities after Panama’s Supreme Court annulled concessions held by CK Hutchison, a Hong Kong-based company, at the Balboa and Cristobal terminals. While China cites safety, Panamanian officials view this as a response to weakened Chinese interests at the Panama Canal.
This situation reflects a larger contest over influence in the Western Hemisphere. Over the past two decades, China has grown its reach by investing in infrastructure projects across Latin America, including ports, railways, electricity, and telecommunications. These actions have extended China’s influence beyond commerce.
Meanwhile, the U.S. has started to counter China’s influence. The situation in Panama hints at the difficulty of reversing China’s two decades of infrastructure expansion. Serving with the U.S. Army in the Canal Zone reinforced the strategic importance of the Panama Canal, a marvel of engineering by the U.S. Army Corps of Engineers. It symbolizes American resolve and strategic advantage in the region.
Recent discussions in Panama underline growing concerns about China’s presence around the canal. Many Americans are only now noticing, but Panamanians have observed this expansion for years. As U.S. attention shifted, Chinese companies gained a foothold close to a key maritime chokepoint.
Recognizing China in 2017 and joining the Belt and Road Initiative the next year marked significant shifts for Panama. Chinese firms pushed forward several substantial projects, including a proposed railway and a cruise terminal. Concerns focused on the Balboa and Cristobal terminals, operated by CK Hutchison’s subsidiary, Panama Ports Company. While China didn’t own or manage the canal, companies linked to Beijing influenced surrounding infrastructure.
Panama’s case isn’t isolated. China’s COSCO Shipping controls a major port in Peru, and the State Grid of China has invested in Brazil’s electricity network. In Venezuela, Chinese loans secured oil access, supporting the Maduro regime during isolation. Despite different commercial justifications, these deals culminated in a network of Chinese influence across the region.
The U.S. now sees Chinese influence near the canal as a security concern. The issue has been raised in discussions with Panama, leading to American investment and efforts that prompted CK Hutchison to sell its terminal interests to a U.S.-led group. Panama also distanced itself from the Belt and Road Initiative. When China opposed the sale, Panama’s court nullified the concessions, enabling new management.
Panama is a pivotal attempt to counter China’s infrastructure strategy in Latin America. Beijing’s response shows the significance of infrastructure control. Ports, power grids, and telecom systems hold economic sway, turning commercial ties into political leverage. Panama’s shipping sector is pressured by increased inspections, risking a shift of vessels to other registries.
This contest is unlikely to be the last in the Western Hemisphere. Similar conflicts may emerge wherever infrastructure meets national security. China’s approach relied on investment and long-term relationships, not military force. The U.S. must compete with the same methodical persistence to counter Beijing’s influence.
John Spencer and Frank Viola, associated with the Madison Policy Forum, provide insights into these geopolitical challenges.