China Lashes Out at Hutchison’s Ports Deal with BlackRock-MSC Partnership

After initially saying it would not comment on a “commercial deal,” the Chinese government used the media to lash out at the deal and criticize CK Hutchison. The proposed sale involves operations in 43 global ports outside China and the terminals at each side of the Panama Canal but is becoming embroiled in the larger political debate and the trade war between Trump and China as well as the government’s criticism of Hong Kong billionaire Li Ka-shing who controls CK Hutchison.

The government-owned newspaper Ta Kung Pao based in Hong Kong and seen as a mouthpiece for the Chinese Communist Party released a strongly worded editorial on Thursday, March 13, attacking the deal on patriotic terms. It cites the Trump administration's moves on tariffs and pending proposal for port fees on Chinese-built ships rolling it all into an American plot for domination. They warn the deal is part of a plot to deprive China of access to key shipping routes and global trade.

The New York Times highlights that the article says if the deal is completed, “the United States will definitely use it for political purposes and promote its own political agenda. China’s shipping and trade there will inevitably be subject to the United States.”

The reports cite that there has been a growing strain between Li Ka-shing and the Communist government which views him as supporting rival positions. The article calls CK Hutchison which said it would make $19 billion on the deal “profit-seeking,” and says it is “spineless groveling,” as well as a betrayal of the Chinese people. 

Saying that the deal goes against national interests, the editorial warns that the company “should think twice,” and “carefully,” about its position and where it stands. Official government sources quickly reposted the article which was seen as a further government endorsement of the positions.

Analysts said it was not surprising that China would speak out against the deal but it might just be bluster as it does not want to lose its position in major ports such as Felixstowe in the UK, Rotterdam, Europe, Australia, South America, and Asia. CK Hutchison however would retain its Chinese ports meaning China does not have to approve the deal.

The sale of the two terminals in Panama at Balboa and Cristobal was positioned as a parallel but separate transaction. The government of Panama has already said it would be reviewing the sale and now Bloomberg speculates that Panama might use China’s criticism to reject the sale. Trump hailed the BlackRock deal as a key component to regaining control of the Panama Canal but NBC News reported yesterday Trump has also asked for plans to place a U.S. military presence in Panama possibly to seize the canal.

The terms of the sale are for a partnership with BlackRock and MSC Mediterranean Shipping Company’s Terminal Investment Limited (TiL). MSC has taken a low profile in the media creating the impression that the deal is BlackRock’s. 

Hutchison has not responded to the criticism of the deal but the value of its stock plunged as investors feared the sale might not proceed. The company had set the beginning of April as a target for a final agreement.