BlackRock Eyes China Ally In $23B Panama Canal Power Play
BlackRock’s Panama Canal negotiations have taken quite a dramatic turn right now, and it’s all because CK Hutchison is actually considering adding a Chinese partner to their massive $22.8 billion port deal. The exclusivity period for this BlackRock Panama deal ended on Sunday, which means new consortium members can now join this transaction that involves some pretty important Panama Canal assets along with Chinese interests.
Also Read: BlackRock’s Rieder Sees Surprise September Rate Cut as Inflation Holds
BlackRock’s Panama Canal Bid, CK Hutchison Ports, And China Ties
Chinese Investor Joins The Mix
The situation with BlackRock’s Panama deal and China has gotten more complex after CK Hutchison revealed they’re having ongoing discussions about bringing in what they’re calling a “significant” Chinese investor to the consortium. Reports have been tying China’s state-owned Cosco Shipping to getting a potential stake in this BlackRock Panama deal, and this comes right after China launched an antitrust review before the April deadline.
China’s Foreign Ministry spokesperson Guo Jiakun stated:
“The Chinese government will conduct lawful regulation, firmly safeguard national sovereignty, security and development interests, and uphold justice and fairness in the market.”
Deal Gets Split Into Two Parts
BlackRock’s Panama Canal deal actually involves two different components with separate structures. The first part transfers CK Hutchison’s 90-percent interest in Panama Ports Company, which controls both Balboa and Cristóbal ports that sit on opposite sides of the Panama Canal. The second component involves 80 percent of operations at 41 other global ports around the world.
The deal would give Cosco stakes in the 41 ports but not the Panama Canal facilities themselves, which keeps Chinese interests away from the most sensitive assets in this BlackRock Panama Canal transaction.
Panama Government Not Happy About This
Panama’s Supreme Court is currently reviewing BlackRock’s Panama Canal transaction after the attorney general said it’s unconstitutional. The government also claims that CK Hutchison owes hundreds of millions from previous contracts related to these port facilities.
Even more concerning for some officials is what this could mean for neutrality. The administrator at the Panama Canal Authority, Ricaurte Vásquez Morales, explained that the sale could potentially create problems for Panama’s Canal neutrality because of how much capacity one shipping company—MSC in this case—would control.
US Security Worries
Secretary of State Marco Rubio has actually cited Hutchison’s Hong Kong ties as a national security concern when it comes to this BlackRock Panama Canal acquisition. And that makes sense when you consider that the Panama Canal handles 46 percent of container traffic moving from Northeast Asia to the US East Coast, making this deal pretty strategically important.
Also Read: De-Dollarization Moving Central Banks To Other Assets: BlackRock
The negotiations for BlackRock’s Panama deal with China are happening right now while the US and China are still dealing with their ongoing trade tensions. Both countries started their third round of trade talks in Sweden recently, and any changes to the consortium structure will need approval from all the relevant authorities.
Read More
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BlackRock Eyes China Ally In $23B Panama Canal Power Play
BlackRock’s Panama Canal negotiations have taken quite a dramatic turn right now, and it’s all because CK Hutchison is actually considering adding a Chinese partner to their massive $22.8 billion port deal. The exclusivity period for this BlackRock Panama deal ended on Sunday, which means new consortium members can now join this transaction that involves some pretty important Panama Canal assets along with Chinese interests.
Also Read: BlackRock’s Rieder Sees Surprise September Rate Cut as Inflation Holds
BlackRock’s Panama Canal Bid, CK Hutchison Ports, And China Ties
Chinese Investor Joins The Mix
The situation with BlackRock’s Panama deal and China has gotten more complex after CK Hutchison revealed they’re having ongoing discussions about bringing in what they’re calling a “significant” Chinese investor to the consortium. Reports have been tying China’s state-owned Cosco Shipping to getting a potential stake in this BlackRock Panama deal, and this comes right after China launched an antitrust review before the April deadline.
China’s Foreign Ministry spokesperson Guo Jiakun stated:
“The Chinese government will conduct lawful regulation, firmly safeguard national sovereignty, security and development interests, and uphold justice and fairness in the market.”
Deal Gets Split Into Two Parts
BlackRock’s Panama Canal deal actually involves two different components with separate structures. The first part transfers CK Hutchison’s 90-percent interest in Panama Ports Company, which controls both Balboa and Cristóbal ports that sit on opposite sides of the Panama Canal. The second component involves 80 percent of operations at 41 other global ports around the world.
The deal would give Cosco stakes in the 41 ports but not the Panama Canal facilities themselves, which keeps Chinese interests away from the most sensitive assets in this BlackRock Panama Canal transaction.
Panama Government Not Happy About This
Panama’s Supreme Court is currently reviewing BlackRock’s Panama Canal transaction after the attorney general said it’s unconstitutional. The government also claims that CK Hutchison owes hundreds of millions from previous contracts related to these port facilities.
Even more concerning for some officials is what this could mean for neutrality. The administrator at the Panama Canal Authority, Ricaurte Vásquez Morales, explained that the sale could potentially create problems for Panama’s Canal neutrality because of how much capacity one shipping company—MSC in this case—would control.
US Security Worries
Secretary of State Marco Rubio has actually cited Hutchison’s Hong Kong ties as a national security concern when it comes to this BlackRock Panama Canal acquisition. And that makes sense when you consider that the Panama Canal handles 46 percent of container traffic moving from Northeast Asia to the US East Coast, making this deal pretty strategically important.
Also Read: De-Dollarization Moving Central Banks To Other Assets: BlackRock
The negotiations for BlackRock’s Panama deal with China are happening right now while the US and China are still dealing with their ongoing trade tensions. Both countries started their third round of trade talks in Sweden recently, and any changes to the consortium structure will need approval from all the relevant authorities.
Read More