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China’s antitrust regulator has said it will review the sale of two ports on the Panama Canal by Hong Kong’s CK Hutchison to a consortium led by BlackRock, adding to uncertainty around the geopolitically sensitive deal.
The planned sale is part of a $22.8bn deal for 43 ports around the world, which has sparked criticism from China, with CK Hutchison having already been warned to “think twice” about selling to a group that includes US investors BlackRock and Global Infrastructure Partners.
China’s State Administration for Market Regulation published comments on its website on Friday saying it was aware of the deal and would “review it in accordance with the law to protect fair competition in the market and safeguard the public interest”.
It said the comments were in response to questions about the Panama ports deal from Beijing-backed newspaper Ta Kung Pao in Hong Kong. The comments came from an official in SAMR’s anti-monopoly division.
The move by Beijing follows earlier commentary in Ta Kung Pao this month that called the sale a “spineless, grovelling” move that “sells out all Chinese people”.
It is not clear whether Chinese regulators intend to review the entire deal or will limit their focus to the ports in Panama.
The two Panama ports account for only a small proportion of the deal value, which includes ports in Europe, south-east Asia and the Middle East, said two people familiar with the matter.
However, SAMR has been collecting information and preparing to launch the probe since last week, said another person familiar with the regulator’s work. The regulator was assessing whether the sale would breach regulations or restrict competition in China’s domestic shipping and international cargo trade markets, the person added.
At least one industry expert has been consulted by SAMR to work on the case, according to two people familiar with the matter. The expert had suggested the regulator impose conditions on the purchase by the BlackRock-led consortium to ensure the deal would not weaken the competitiveness of Chinese shipping companies and cargo owners, the people added.
The agreement “in principle” was announced in early March, with a formal signing of the Panama ports transaction expected by April 2. However, this is now set to be delayed, according to two people familiar with the matter.
Talks between the BlackRock-led group and CK Hutchison to get the deal over the line were continuing, people familiar with the matter told the FT earlier this week. Both sides were preparing for a potential SAMR review, one of the people added.
CK Hutchison, controlled by Hong Kong’s richest man Li Ka-shing and his family, has increasingly been caught between Beijing and Washington over the Panama ports since US President Donald Trump complained of Chinese influence over the canal and said the US would be “taking it back”.
It is unusual for a Chinese state agency to review a deal involving a Hong Kong-based company. CK Hutchison’s holding company is incorporated in the Cayman Islands and the conglomerate’s ports in China are excluded from the sale.
“Is this a warning shot to others or a look to scuttle this deal?” one person familiar with the deal said.
“On paper, the SAMR reviewing how this deal affects the Chinese shipping industry under its anti-monopoly mandate makes a lot of sense. But does anyone really believe that or is this . . . the Chinese scuttling a deal which will then have ramifications on Hong Kong as a financial centre?”
“Torpedoing the deal . . . would send shockwaves all around the financial world,” said Josh Lipsky, senior director at the Atlantic Council’s GeoEconomics Center and a former adviser at the IMF. “The risks are so high for all involved.”
CK Hutchison is also under scrutiny from Panama’s auditor-general Anel Flores, who said this week his office was working “arduously” to complete an audit into the group’s two Panama port concessions in the coming days.
The audit is examining whether CK Hutchison has complied with the terms of the 25-year port concession, which was originally signed in 1997 and then extended for another 25 years in 2021. The concession is under scrutiny in Panama because of the relatively low returns it has generated for the state.
BlackRock declined to comment. CK Hutchison and SAMR did not immediately respond to requests for comment.
Additional reporting by Michael Stott in Santiago
