During his inaugural address in January, President Donald Trump vowed to eradicate Chinese influence from the Panama Canal and preserve U.S. vital interests in the region. After months of tense negotiations, he appears to be on the cusp of achieving that goal.
The momentum began to shift in April, when CK Hutchison, the Hong Kong-based company operating two Panama Canal port terminals with deep ties to the Chinese Communist Party (CCP), announced plans to sell its global port holdings, including the strategically critical sites in Panama. The surprise development stunned CCP leadership, which reportedly saw the move as a severe threat to its regional ambitions. As The Guardian reported, Beijing responded with fury and launched a last-ditch effort to block the sale.
The Chinese government opened an investigation into the deal under the guise of anti-monopoly laws and alleged corruption. The CCP leaned on Panama with legal threats, claiming that the sale could endanger China’s economic and geopolitical interests. Then, in another blow to China and a sign that Trump’s pressure campaign was working, Panama officially withdrew from Beijing’s Belt and Road Initiative (BRI), a global infrastructure scheme used by China to ensnare smaller nations in debt and expand its influence.
Still, the most significant recent development came from within Panama itself. On July 29, the country’s comptroller general refused to register the extension of the port concession agreement, effectively blocking a delay that Beijing had sought. The rejection severely undercut China’s strategy and left the existing deal for CK Hutchinson to operate the ports on life support. All indications now point to a Western buyer stepping in—a major strategic win for the United States and a serious loss for China.
The fight over Panama’s ports has far-reaching implications. As the deadline for the port deal looms, the Chinese Communist Party is pulling out all the stops to delay or block the sale, recognizing that it could mark the biggest defeat for Beijing in decades. The 145-day extension originally set to finalize negotiations expired in July, and even a 12-day emergency extension has failed.
According to Professor Pei Xiaohong, a former lecturer in political economy and advisor to the Politburo who defected in 1990, the CCP has always viewed trade in militaristic terms. “After Lenin, Mao regarded trade as a battlefield,” Pei explained. “He believed the party should deceive the enemy while advocating win-win cooperation and competing fiercely.” She pointed to China’s push for control of the Panama Canal as a historical example of this philosophy.
Pei also recounted that in 1994, General Zhang Wannian, Chief of General Staff of China’s military, referred to the United States as the communist nation’s main enemy. “Facing blatant interference by the American hegemonists in our internal affairs,” Zhang said, “we must reinforce the armed forces more intensively.” Pei said Zhang called for “a rapid, unstoppable preparation for war with the U.S.”
Beijing’s strategy to control Panama’s ports began in earnest in the late 1990s. When Panama auctioned off port management rights in 1997, the Chinese government disguised one of its subsidiaries as a British firm to secure the contract, beating out American and other Western companies. Pei explained that CCP leader Jiang Zemin viewed Hong Kong’s influence in Panama as tantamount to party control, despite the city’s nominal autonomy under the Sino-British Declaration.
Multiple Chinese military defectors have confirmed that Beijing sees the Panama Canal as a potential strategic advantage in any future conflict with the United States. “Following Soviet ideology, the party must conquer the West and, if necessary, wage total war,” said Lt. Col. Quán Chāngpǔ, who defected in the early 1990s. He noted that acquiring overseas port access was central to the CCP’s long-term war preparations.
A former senior officer in the PLA’s General Political Department also warned that China has advanced military equipment disguised as civilian materials. “For their success, they need to be positioned close to the battlefield in advance,” he said. “It may be too late before you identify them.”
Beijing has reportedly deployed long-range missile launchers and command centers in modified shipping containers. A program dubbed “A Warship in a Box” allows the concealment of two heavy frigates aboard a civilian cargo ship.
Additionally, the CCP has developed roll-on/roll-off ferries, nearly indistinguishable from commercial models, that can transport heavy military equipment and amphibious forces. Research has shown that Chinese state-owned COSCO Shipping has vessels capable of transporting up to two battalions.
COSCO has maintained a major presence in Panama since 1995, with four subsidiaries collecting more than $200 million in annual tolls. Thanks to Panama Canal operations, COSCO increased its container capacity to the U.S. from 3,000 TEUs to 16,400 TEUs within five years, and total volume across the Americas rose from 150,000 to 370,000 TEUs annually. COSCO is now the fourth-largest shipping firm globally and is tightly controlled by the CCP.
Analysts at the Australian foreign policy think tank Lowy Institute recently warned that the CCP’s use of commercial ports to project military power is a growing concern. “Behind the guise of commerce,” the think tank wrote, China’s port networks could “threaten vital sea lanes, constrain U.S. and allied military maneuverability” and give Beijing a decisive advantage.
A sale of Panama’s ports to a Western entity would dramatically diminish both the military and economic leverage China currently enjoys. The ports are a crucial component of Xi Jinping’s BRI, which has drawn growing skepticism around the globe.
China’s weakening grip in Panama may soon be mirrored elsewhere. Ten years ago, Beijing took control of the Port of Darwin in Australia under a 99-year lease backed by BRI financing. The port lies adjacent to a major military base used by U.S. and allied forces. However, the Chinese firm behind the deal defaulted on a $107 million bond in 2024, and Australia is now poised to reclaim the port.
Peter Jennings, a former Australian Defense Department official, said the loss of Darwin would “reflect badly on President Xi Jinping’s signature Belt and Road Initiative.” Chinese defectors agree.
If Australia succeeds in taking back Darwin, it could set a precedent that encourages other nations—including Panama—to reverse course and strip Beijing of its strategic footholds. President Trump, it seems, has already helped push one domino over.
Ben Solis is the pen name of an international affairs journalist, historian, and researcher.
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