Hong Kong richest man is in hot water over his company’s Panama Canal ports deal

The Panama Canal’s Port of Balboa

Analysis

Hong Kong tycoon Li Ka-shing’s business empire is in the crosshairs after CK Hutchison Holdings chose to sell its Panama Canal port assets to a consortium that includes U.S. investment firm BlackRock Inc., apparently angering Beijing.

Over the past week, Beijing’s Hong Kong affairs offices have posted scathing commentaries from a local state-backed media outlet over the tentative deal by Hutchison, which is controlled by Li’s family.

That raises questions about the deal and highlights the difficulties Hong Kong businesses face as they balance demands from Beijing for national loyalty and their own capitalist interests in the once free-wheeling Asian financial hub.

Hutchison, through its various businesses, is also actively involved in the Greater Bay Area (GBA), particularly through its port operations and other related activities, aiming to leverage the region’s growth and connectivity.

Hong Kong’s richest tycoon

Nicknamed “Superman,” Li is one of the wealthiest individuals in Hong Kong and the GBA, being among the world’s 50 richest people, with Forbes calculating his net worth at $38 billion. Li, 96, retired from his position as chairman of CK Hutchison in 2018, succeeded by his elder son Victor. But he’s still one of Hong Kong’s most influential figures.

Hong Kong tycoon Li Ka-shing, chairman of CK Hutchison Holdings company, speaks during a press conference to announce the company’s annual results in Hong Kong, this week

Li’s rags-to-riches story paralleled the former British colony’s rise. His business empire touches almost every aspect of daily life in Hong Kong, from properties and supermarkets to telecommunications and utilities. Globally, his conglomerate owns assets including British drugstore chain Superdrug and European mobile phone network operator Three.

A Hutchison subsidiary has operated ports at both ends of the Panama Canal since 1997. That was one reason U.S. President Donald Trump has alleged Chinese interference with the critical shipping lane’s operations.

Li’s ties with Beijing

Li’s influence extends beyond business. He has met with top Chinese leaders and has served on the elite committee that selected Hong Kong’s leader.

Experts on ties between Beijing and Hong Kong said ruling Communist Party leaders once understood that support from the business sector was crucial for maintaining Hong Kong’s capitalist system. It has been strategically vital for mainland China’s economy, given the role their global networks and resources play in the country’s development. So, Li has had notable political influence.

But Li has faced criticism over some business decisions. When he sold off some mainland Chinese assets in 2015, an article published by a think tank affiliated with Chinese official news agency Xinhua accused him of being immoral.

During pro-democracy protests in 2019, Li was blasted by some pro-Beijing supporters for his perceived ambivalence about the unrest. Some other Hong Kong business leaders adopted a harsher stance.

Panama ports deal

CK Hutchison announced March 4 that it would sell all its shares in Hutchison Port Holdings and in Hutchison Port Group Holdings to the consortium that also includes BlackRock subsidiary Global Infrastructure Partners and Terminal Investment Limited, which is chaired by Italian shipping scion Diego Aponte, whose family reportedly has a longstanding relationship with Li’s.

If approved, the deal, valued at nearly $23 billion including $5 billion in debt, will give the consortium control over 43 ports in 23 countries, including the ports of Balboa and Cristobal, located at either end of the canal. The transaction does not include ports in Hong Kong or mainland China. CK Hutchison said the transaction was purely commercial in nature.

The deal pleased Trump but angered Beijing.

One of the Beijing-backed newspaper commentaries described the deal as a betrayal of all Chinese and said the company should think about which side to take. The other said great entrepreneurs are patriots, suggesting that businesspeople who “dance with” predatory American politicians would be doomed to infamy.

Comments on popular posts about the deal on Chinese social media platform Weibo tend to be more critical than favorable toward Li.

Chief Executive John Lee avoided direct criticism of the deal or Trump, but told reporters on Tuesday his government opposes bullying tactics in international economic and trade relations, reiterating Beijing’s stance.

Ports carry geopolitical value

Some unconfirmed reports have suggested Chinese leaders were angry not to have been consulted in advance about the deal.

George Chen, managing director for Hong Kong at The Asia Group, a Washington-headquartered business and policy consulting firm, said Beijing may have been disappointed because it had almost no time to devise a response in advance.

Ports are valuable strategic assets and transactions involving them are always sensitive, said Wilson Chan, co-founder of the Pagoda Institute, a think tank focusing on public policy and the global political economy.

It is unclear whether pressure from Beijing will affect the deal, which has to be approved by Panama’s government. China’s Foreign Ministry deflected a question about whether authorities are investigating the deal, saying reporters should ask other authorities.

Cancelling the deal would be risky, Chan said.

“Strictly speaking, you just let Trump take credit for it, then you later say ‘Sorry, I’m canceling the deal.’ You can imagine what Trump’s reaction would be,” he said, adding that would also affect how the outside world views Hong Kong businesses.

CK Hutchison has not commented on the controversy.

The company reported its 2024 financial results yesterday, but did not hold a news conference. Victor Li did not mention the deal in his chairman’s statement but said the operating environment for the group’s business is expected to be volatile and unpredictable. He said he anticipated potential headwinds for the company’s ports and related services in early 2025 as shipping lines transition into their new alliances and ongoing geopolitical risk impacts global trade.

Longer term implications

The first Trump administration sanctioned Chinese and Hong Kong officials for undermining the autonomy of the territory promised when Britain handed its colony to Beijing in 1997 under a concept dubbed “One country, two systems.” It promised the city could keep its Western-style civil liberties and economic autonomy for at least 50 years, but following the 2019 protests, Beijing has doubled-down on its political control of the city.

Li could try to placate critics who deem him insufficiently patriotic, Chan said, by using proceeds from selling the port assets for investments aligned with Beijing’s policies, particularly in developing Hong Kong and mainland port businesses.

But relations between private businesses and Beijing remain uncertain, said The Asia Group’s Chen. Even though Chinese President Xi Jinping recently met with private sector business leaders in a show of support, some may wonder if they must follow the party line even if that might conflict with their business interests, he said.

If Beijing steps up pressure on Li to scrap the deal, the Trump administration could hit back with more sanctions and restrictions on Hong Kong and Chinese businesses and some individuals, he said.

The situation shows that Washington’s concerns about Hong Kong’s business autonomy are valid, Chen said.

“This is bad when it comes to the defense of ‘one country, two systems,’” Chen said. MDT/AP