Panama Defends Ports Ruling as China Warns of 'Heavy Price' in Geopolitical Flashpoint

Panama's government has firmly rejected warnings from Beijing of "heavy" political and economic consequences, following a landmark court decision to evict a major Hong Kong-based port operator from the strategic Panama Canal.

In a social media statement on Wednesday, President José Raúl Mulino pushed back against what he termed threats from the Chinese government. The dispute stems from last week's ruling by Panama's Supreme Court, which declared the 25-year concession held by CK Hutchison's subsidiary, Panama Ports Company, to operate the Cristobal and Balboa terminals "unconstitutional."

"Panama is a nation that upholds the rule of law and respects the decisions of its independent judiciary," Mulino wrote. He confirmed the Foreign Ministry would issue a formal statement and take "corresponding decisions."

The case has become a focal point in the broader competition for influence in Latin America between the United States and China. Tensions escalated last year after former U.S. President Donald Trump publicly threatened to "take control" of the canal and called for CK Hutchison's contracts to be canceled. Following those remarks, Panama's comptroller general reviewed and recommended annulling the agreement, a move the Supreme Court has now upheld.

China's response was swift and severe. The Hong Kong and Macao Affairs Office labeled the court's decision "absurd and shameful," warning Panama would "pay a heavy price." Foreign Ministry spokesman Lin Jian accused "certain forces" of a "Cold War mentality" and vowed to defend Chinese companies' rights. "The world sees clearly who is seeking to forcibly own the Panama Canal," Lin added, in an apparent reference to the U.S.

With the concession voided, the Panamanian government has appointed Danish shipping giant Maersk on an interim basis to manage the terminals until a new long-term operator is selected. The canal, a vital global trade artery connecting the Atlantic and Pacific, has been under Panamanian control since 1999.

Voices from the Region

Carlos Méndez, Political Analyst in Panama City: "This isn't just a contract dispute; it's a sovereignty test. Mulino's response underscores that Panama's institutions, not external pressure, will have the final say. The challenge now is navigating the diplomatic fallout without compromising economic stability."

Professor Li Wei, International Relations Scholar in Beijing: "The legal reasoning behind the court's sudden reversal after decades of operation is questionable. This appears to be a clear case of geopolitical maneuvering, undermining the legitimate, long-term investments of Chinese enterprises in the region."

Ana Rodríguez, Trade Union Representative, Colón: "This is outrageous political theater that puts our livelihoods at risk. For years, this port operation provided jobs and investment. Now it's being used as a pawn between superpowers. The 'heavy price' will be paid by Panamanian workers, not the politicians or foreign governments."

James Thorne, Latin America Risk Consultant, Miami: "The move signals a realignment. Panama is recalibrating its deep economic ties with China in response to sustained pressure from Washington. The interim choice of Maersk, a Western firm, is highly symbolic. The long-term question is who will win the new concession and on what terms."