Donald Trump has frequently expressed dissatisfaction with the Panama Canal and its associated fees, labeling the crucial transport route a “foolish gift [to Panama] that should never have been made” and suggesting the U.S. should reclaim it. He has also accused China of having control over the canal. During his inauguration, Trump claimed, without evidence, that “China is operating the Panama Canal and we didn’t give it to China. We gave it to Panama and we’re taking it back.”
So, what is the reality of China’s involvement with the Panama Canal? Who truly controls it? The 82 km (51-mile) canal, which connects the Atlantic and Pacific Oceans, was constructed and owned by the U.S. in the early 1900s before being handed over to Panama in 1977 under a treaty that ensured its neutrality. The U.S. remains the largest user of the canal, accounting for approximately three-quarters of the cargo that passes through it each year, with China being a distant second.
What is China’s influence or presence in this context? There are ports at both ends of the canal operated by a Hong Kong-based company, which Trump likely referenced when he stated, “China is based at both ends of the Panama Canal.” In total, five ports are located near the canal, with some owned by foreign companies, including U.S. firms.
In 1996, Panama granted a concession to a Hong Kong company, then known as Hutchison-Whampoa, to manage the Balboa port on the Pacific side and the Cristobal port on the Atlantic side. This agreement did not transfer ownership of the ports to Hutchison-Whampoa but allowed it to operate them on behalf of the Panamanian government. The port operator is now called Panama Ports Company, part of Hutchison Ports, a subsidiary of CK Hutchison Holdings, owned by billionaire Li Ka-shing. In 2021, Panama Ports Company’s concession was extended for an additional 25 years.
In 1999, the U.S. State Department stated that after thorough investigation, they found no evidence suggesting that the People’s Republic of China would be able to control canal operations. Recently, China’s foreign ministry spokesperson, Mao Ning, affirmed that “China does not participate in the management and operation of the canal and has never interfered in the affairs of the canal.”
How concerned should we be about this situation? Some U.S. officials and analysts have raised valid concerns regarding the significant presence of a Chinese company in this strategically important channel, but they believe Trump’s comments are primarily aimed at curbing Beijing’s expanding diplomatic and economic influence in Latin America. In recent years, China has persuaded several nations, including Panama in 2017, to sever ties with Taiwan and establish diplomatic relations with Beijing.
