China sharply warned Panama on Tuesday that it would face significant political and economic consequences after a Supreme Court ruling annulled a long-standing contract allowing a Hong Kong-based firm to operate key ports at the Panama Canal.
The decision has intensified geopolitical tensions surrounding control of one of the world’s most strategic trade routes and complicated a major global ports sale involving Western investors.
Beijing’s Hong Kong and Macau Affairs Office condemned the Panamanian Supreme Court’s decision as irrational and damaging, vowing to defend the interests of Chinese enterprises.
In a statement posted online, the office said the ruling ignored facts and undermined trust in Panama’s legal and business environment.
“If the Panamanian authorities insist on having their own way ... heavy prices both politically and economically will surely be paid!” the office said.
Panamanian authorities did not immediately respond to the warning.
The ruling nullified a concession held since the 1990s by Panama Ports Company, a subsidiary of CK Hutchison Holdings, to operate container terminals at both the Pacific and Atlantic entrances of the canal.
The court cited constitutional violations and public interest concerns in striking down the contract.
Hong Kong officials separately said they strongly opposed the ruling and warned it could prompt businesses to reassess investment plans in Panama.
The court decision has broader implications for international trade and investment flows.
It threatens to disrupt CK Hutchison’s proposed $23 billion sale of 43 ports across 23 countries, including the Panama Canal terminals, to a consortium led by BlackRock and Mediterranean Shipping Company.
CK Hutchison’s subsidiary said the ruling was inconsistent with the legal framework under which it had operated and indicated it may pursue legal remedies.
The decision followed an audit launched by Panama’s comptroller general questioning the financial returns of the concession to the state, findings the company has rejected.
U.S. officials welcomed the ruling, with a senior lawmaker calling it a strategic victory.
U.S. President Donald Trump has repeatedly argued that Washington should “take back” control of the canal amid concerns over Chinese influence.
Beijing, without naming the United States, accused an unnamed power of exerting pressure on Panama and undermining judicial independence.