China Threatens to Block $23B Port Deal Without Cosco Stake: Report
Under the proposed sale, Hong Kong-based port operator CK Hutchison Holdings would hand ownership of more than 40 ports worldwide to a consortium including Mediterranean Shipping Company (MSC) and BlackRock.
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But according to a Thursday report from the Wall Street Journal, China wants to block the acquisition if its leading ocean carrier, Cosco Shipping, is not included in the deal.
The deal includes the ports of Balboa and Cristóbal in Panama, both of which sit on the opposite sides of the Panama Canal.
China has had the deal under antitrust review since March, delaying the official approval of the sale. The Panamanian government also still needs to approve the acquisition.
The Chinese Communist Party (CCP) is pushing for Cosco to be an equal partner and shareholder of the ports alongside both BlackRock and MSC, which is the world's largest container shipping company, the report said.
Talks between the current parties in the deal are expected to continue through July 27, which is the end of the 145-day exclusive negotiation period. Cosco would not be able to be part of the talks until that period ends.
While BlackRock, MSC and Hutchison are reportedly open to Cosco taking a stake in the deal, U.S. lawmakers don't share the same feeling.
When the deal was first announced in March, it was seen as a major victory for the Trump administration, which has been seeking to rid the Panama Canal of any alleged Chinese influence.
The president has claimed that the U.S. must 'take back' the canal as part of his protectionist, 'America First' rhetoric, so including a Chinese buyer in the sale of the Balboa and Cristóbal ports would further inflame the situation again.
The U.S. congressional committee on China remains concerned as Cosco floats in the background of the mega ports deal.
After the Wall Street Journal article published Thursday, Chairman John Moolenaar (R-Mich.) of the House Select Committee on China made his letter to a top Panamanian official public.
The letter expresses alarm that CCP-directed entities could be included as part of a transaction involving port concessions managed by CK Hutchison, which Moolenaar said would pose a direct threat to the national security of both Panama and the U.S.
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