Panama is facing consequences after distancing itself from Beijing. Reports reveal that Chinese authorities have implemented increased inspections and detentions of ships flagged by Panama. This followed Panama’s Supreme Court decision to strike down concessions at Balboa and Cristobal container terminals, previously held by CK Hutchison, a Hong Kong-based company. While Beijing attributes these measures to safety, Panamanian officials consider them retaliation for a decision diminishing China’s commercial influence at both ends of the Panama Canal.
The situation in Panama is part of a larger struggle over influence in the Western Hemisphere. Over the past twenty years, China expanded its presence by financing and developing infrastructure such as ports, railways, electrical grids, and more across Latin America. These investments have broadened China’s influence beyond mere commerce.
Washington has begun responding to this expansion. The Panama dispute highlights the challenges in countering decades of Chinese infrastructure development. Having served in the Panama Canal Zone, the canal represents more than a waterway. It stands as a major engineering feat, demonstrating American prowess and strategic advantage in the Western Hemisphere.
Recent visits to Panama reveal concerns regarding China’s growing presence around the canal. Many Americans are becoming aware, but Panamanians have observed this expansion unfold over the years. Recognizing the People’s Republic of China in 2017, Panama ended diplomatic ties with Taiwan and joined the Belt and Road Initiative. This led Chinese firms to engage in major projects such as the Panama City-David railway and the Amador Cruise Terminal.
Concern centered on Balboa and Cristobal terminals operated by Panama Ports Company, linked to CK Hutchison. While China doesn’t control the canal, companies tied to Beijing have influenced surrounding commercial infrastructure. This scenario isn’t unique. COSCO Shipping operates a port in Peru, while China’s State Grid heavily invested in Brazil’s electricity network. China’s reach extends into energy, mining, and telecommunications throughout Latin America.
In Venezuela, Chinese lending over $60 billion secured oil access, with support for the Maduro regime during isolation. Each investment had commercial reasoning, but collectively they formed a network strengthening Chinese influence. Washington perceives Chinese presence near the canal as a security concern, prompting engagement with Panama and encouraging U.S. investment.
Efforts led CK Hutchison to sell its controlling interest to a U.S.-led consortium, alongside Panama’s withdrawal from the Belt and Road Initiative. When Chinese resistance stalled the sale, Panama’s Supreme Court annulled the port concessions, enabling new management. Panama represents initial efforts to thwart China’s infrastructure-based influence strategy throughout Latin America.
Beijing’s response shows how crucial infrastructure control is. Ports facilitate trade, grids power economies, and telecom systems transmit information. As nations depend on these networks, commercial ties might transform into political leverage.
Panama’s shipping registry now experiences delays and increased scrutiny, with potential shipowner relocation. Panama won’t be the last arena for infrastructure-based contests within the Western Hemisphere. Similar disputes may emerge where transport, energy, and communications networks intersect with national security.
China’s approach, consisting of long-term relationships and investments, built its position without military force. To overturn this, the U.S. must match Beijing’s strategy with equal persistence and dedication.
John Spencer is the chair of war studies at the Madison Policy Forum, where Frank Viola is a fellow.
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