Trump’s Panama tensions augur risk for Chinese investments
US claims of Chinese influence in Panama Canal may not affect operations, analysts said, but Beijing’s investments in the region could be a target
The United States’ pledge to reassert control over the Panama Canal is not expected to cause major shipping disruptions, analysts said, but should be seen as a sign of caution for Beijing’s investments in Latin America.
US President Donald Trump’s claim in his inaugural address on January 20 that “China is operating the Panama Canal” primarily refers to ports operated there since 1997 by the Hong Kong-based company Hutchison Ports, they said – adding the firm’s new-found role as an international flashpoint carries little precedent.
“It was always considered by everyone involved as a purely commercial operation, without any political implications or consequences,” said Ralph Leszczynski, head of research for shipbroking and shipping services group Banchero Costa. He added the tensions surrounding the canal have not affected commercial operations or freight rates.
The US, the world’s largest exporter of liquefied natural gas (LNG) and liquefied petroleum gas (LPG), uses the canal for many of its energy shipments. Nearly 75 per cent of the canal’s cargo traffic originates from or is destined for the United States.
Therefore, Leszczynski said, “It is in the interest of the United States to ensure their own LNG and LPG exports can pass the canal as trouble-free and as cheaply as possible.”
I do not think there are any significant commercial implications from which company controls the terminals of the canal
He noted that while the US’ stance on the canal is part of an assertive foreign policy by the new administration, the day-to-day operations would remain unaffected no matter the origin of the entity running the ports.
“I do not think there are any significant commercial implications from which company controls the terminals of the canal, whether it’s a Hong Kong-based company or a US-based company.”
An Dali, a former representative of the China Council for the Promotion of International Trade in Latin America, voiced similar sentiments, calling the canal discussion politically driven.