‘Wonder of the word’: US and China clash over Panama Canal

The US has warned it would not allow China to “threaten” a key waterway and vowed to take it back from “China’s influence”.

China has hit back at the US after it said it would not allow China to “weaponise” or “threaten” operations of the Panama Canal.

US President Donald Trump has vowed to “take back” the US-built canal to counter what he sees as China’s disproportionate influence over the key waterway – which it handed over to Panama in 1999.

About 40 per cent of US container traffic passes through the narrow body of water, connecting the Caribbean Sea with the Pacific Ocean.

Speaking alongside Panama’s President Jose Raul Mulino during a rate visit to the Central American nation on Tuesday, US Defense Secretary Pete Hegseth warned “the Panama Canal faces ongoing threats”.

“The United States of America will not allow communist China or any other country to threaten the canal’s operation or integrity,” he said.

“I want to be very clear. China did not build this canal. China does not operate this canal. And China will not weaponise this canal,” Mr Hegseth added, describing it as a “wonder of the world”.

Donald Trump has vowed to ‘take back’ the US-built canal. Picture: Martin Bernetti/AFP

Mr Hegseth, first US defence secretary to visit Panama in decades, said the US and Panama together would “take back the Panama Canal from China’s influence” and keep it open to all nations, using the “deterrent power of the strongest, most effective and most lethal fighting force in the world”.

He claimed that China’s control of critical infrastructure in the canal area gave Beijing the power to conduct spying activities across Panama, making Panama and the United States “less secure, less prosperous and less sovereign”.

A Hong Kong company called Panama Ports operates two ports at either end of the canal connecting the Atlantic and Pacific, through which five per cent of all global shipping passes.

US Secretary of Defense Pete Hegseth (right) talks with Panama Canal Administrator Ricaurte Vasquez. Picture: Martin Bernetti/AFP

‘Blackmail’

Hitting back, the Chinese Embassy in Panama issued a statement refuting Mr Hegseth’s claim that Beijing interferes in the operations of the canal.

“China has never taken part in the management or operation of the Panama Canal, nor has it interfered in issues” concerning the waterway, the statement said, calling on Washington to halt “blackmail” and “plundering” of Panama and other countries of the region.

It labelled Mr Hegseth’s comments “not at all responsible or founded” and said the United States has orchestrated a sensationalist campaign based on the ‘China threat theory’ so as to undermine co-operation between China and Panama.

“China has always respected Panama’s sovereignty with regard to the canal,” the embassy said.

The Chinese Embassy in Panama refuted Mr Hegseth’s claim that Beijing interferes in the operations of the canal. Picture: Arnulfo Franco/AFP

The Panama Ports concession to operate Balboa port on the Pacific side of the canal and Cristobal port on the Atlantic side was first granted in 1997 and renewed for another 25 years in 2021.

But faced with Mr Trump’s repeated threats to seize the canal, Panama has put pressure on CK Hutchison, the parent company of Panama Ports, to pull out of the country.

In January, it began an audit of Panama Ports to determine if it was honouring its concession contract.

On the eve of Mr Hegseth’s visit, Panama’s comptroller announced that the audit had revealed “many breaches” of the contract and said Panama did not receive $1.2 billion it was owed from the operator.

Mr Hegseth said the US and Panama together would ‘take back the Panama Canal from China’s influence’. Picture: Supplied/Ponant

In March, CK Hutchison announced an agreement to sell 43 ports in 23 countries – including its two on the canal – to a group led by giant US asset manager BlackRock for $19 billion in cash.

A furious Beijing has since announced an antitrust review of the deal, which likely prevented the parties from signing an agreement on April 2 as had been planned.

Mr Hegseth’s visit to Panama comes two months after that of US Secretary of State Marco Rubio.

Shortly after that visit, Panama announced it was pulling out of Chinese President Xi Jinping’s landmark global infrastructure program, the Belt and Road Initiative.

Originally published as ‘Wonder of the word’: US and China clash over Panama Canal