CK Hutchison’s shareholders must be hoping the conglomerate boasts some great chess players in its top ranks. Just two weeks ago the Li clan, which controls the sprawling Hong Kong-based company, hoped it had both escaped President Donald Trump’s ire over the Panama Canal and given a boost to its stock by agreeing to sell much of its ports business to a BlackRock-led BLK consortium for almost $23 billion. Now Beijing is making its displeasure over the deal known. That means CK Hutchison is, for now, stuck as a geopolitical pawn.
The in-principle agreement to offload its 80% stake in 43 ports across 23 countries came after weeks of Trump alleging, without evidence, that China “is operating” the Panamanian shipping route; he also threatened that the U.S. “is taking it back”.
Beijing was initially silent on the deal, even though it was unveiled on the same day China kicked off its annual legislative session in the country’s capital – with CK Hutch Chair Victor Li attending as a key adviser. That changed in the past few days with the People’s Republic authorities reposting commentaries condemning the sale to “ill-intentioned U.S. forces” as a betrayal of all Chinese people.
Beijing’s anger is easy to understand: the ports and shipping industry is a key front in China’s trade war with the U.S., so Washington having more sway would not be welcome. Yet its reaction is likely to feed the Trump administration’s claims that the Panama Canal is subject to undue Chinese influence.
Granted, the government run by President Xi Jinping may have no regulatory authority to veto the deal, which excludes all of CK Hutchison’s ports in Hong Kong and China. But it could make it harder for the company to renew contracts to run both the ports and electricity infrastructure in Hong Kong. And it could pile political pressure on the Li family, much as it did to Alibaba BABA founder Jack Ma.
If that proves enough to scupper the sale to BlackRock, the company would be back in Washington’s crosshairs. Victor Li and founder Li Ka-shing would probably be hard-pressed to resolve that dilemma alone. Instead, the ports business’s fate could be added to the growing list of strategic issues for any summit between Trump and Xi – along with, for example, tariffs and TikTok. CK Hutchison’s immediate future is slipping from its executives’ grasp.
Chinese authorities including the Hong Kong and Macau Affairs Office have reposted two newspaper commentaries, published on March 13 and March 15, criticising CK Hutchison’s proposed ports deal with a consortium led by BlackRock as a betrayal of China. The articles were first published by Ta Kung Pao, a state-backed newspaper based in Hong Kong.
CK Hutchison, controlled by Hong Kong billionaire Li Ka-shing, said on March 4 that it had reached a preliminary agreement to sell an 80% stake in its global ports business, which operates in 23 countries including Panama, for $22.8 billion including debt to a consortium comprising BlackRock, Global Infrastructure Partners and Terminal Investment.
Source: Reuters
