China Warns CK Hutchison to be Careful on Ports Deal

China’s foreign ministry has urged all parties involved in a Hong Kong conglomerate’s sale of more than 40 ports around the world to be cautious in how they resolve the takeover.

CK Hutchison has agreed to sell most of its port operations to a consortium led by BlackRock, the American investment giant, and Gianluigi Aponte and his son Diego Aponte – Italian tycoons who control the Mediterranean Shipping Company.

The $23-billion deal was meant to be signed on April 2, but has been opposed by Beijing, which condemned the deal in March as a “betrayal” of the Chinese people.

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Chinese state media issued warnings on Sunday and Monday that the consortium must “act prudently,” and not circumvent a review of the deal by China’s market regulator.

The sale by CK Hutchison, owned by elderly Hong Kong tycoon Li Ka-shing, involves 43 ports in 23 countries, including two ports adjacent to the strategically important Panama Canal.

The takeover of the Panama concessions was lauded by US President Donald Trump, but has become highly politicised amid intensifying Sino-US trade tensions.

In late March, there was speculation that the deal could be cut in half because of Beijing’s intense anger at the “sellout.”

Asia Sentinel reported that CK Hutchison’s 12 ports in the Middle East and Suez Canal are regarded as highly strategic for Chinese trade with Europe. And that Beijing was unlikely to cede control of more ports in Asia to the US-led consortium.

That led to speculation that the ports deal may become an issue, similar to the move to take over US operations of TikTok, that will end up being negotiated between the US and China as part of a bilateral trade deal.

That’s largely because Beijing is seen as having leverage over Washington in both instances.

Await the review, Beijing says

But on April 16, The Wall Street Journal, citing people familiar with the matter, reported that the MSC shipping empire, a part of the BlackRock consortium, has held discussions on moving ahead with the bulk of the deal while disputes over the two Panama ports are resolved.

The Chinese government told Hutchison and the Apontes’ ports operator Terminal Investment Limited that the sale of the global ports was unlikely to be an issue, according to the WSJ.

And that may be why BlackRock CEO Larry Fink is said to be optimistic that the bulk of the deal will eventually proceed after months of regulatory scrutiny.

But with bilateral ties rocked by the huge tariffs imposed by President Trump and the impact that has had on firms in China exporting goods to the US, with fears millions of jobs could be lost, and cargo shipments to the United States decimated, it’s hardly surprising that Beijing is refusing to give any ground.

“We have taken note of relevant reports,” foreign ministry spokesperson Guo Jiakun told a regular press briefing on Monday, according to Xinhua.

“The State Administration for Market Regulation has expressed serious concern over the deal and will conduct a review in accordance with the law, Guo said, noting that all parties involved must refrain from taking any actions to evade the review, and no concentration of undertakings may proceed without approval; otherwise, legal liability will be incurred.”

The spokesman urged the parties to maintain full communications with the relevant Chinese departments, the report said.

China’s top market regulator also responded to the Wall Street Journal report on Sunday, saying it was paying close attention to the deal, and that the parties should not try to avoid an antitrust review.

CK Hutchison announced last month it would sell its 80% holding in the ports business, which encompasses 43 ports on five continents. The business has an enterprise value of $22.8 billion, including debt.

The company did not immediately respond to a Reuters request for comment.