By James T. Areddy

A deal to put U.S. investors in control of a global ports network, including berths at the Panama Canal, removes potential levers for Chinese influence and marks rare American inroads in a strategic sector dominated by Beijing.

An investment group led by Wall Street fund manager BlackRock this week struck a $22.8 billion agreement to buy Hong Kong-based CK Hutchison Holdings's majority ownership of 45 port operations in over 20 countries, most notably facilities at either end of the Panama Canal. That aspect of the deal could blunt a key argument by President Trump that China is in control of the Panama Canal, a questionable proposition from the start but evidence of his intent to reorder world trade.

The injection of private American capital into ports across the world is a twist on Beijing's focus on international infrastructure through a program it calls Belt and Road.

BlackRock's investment represents a rare multicountry U.S. expansion into the ports sector -- and a uniquely American one. It is the first serious manifestation of a long-held view in Washington that America's best chance to compete against China will hinge on private money.

"It's an opportunity to claw back some of the rewiring on global trade China has done with its building and ownership and operation of a lot of ports around the world," Ryan Berg, director of the Americas program at think tank Center for Strategic and International Studies who has advised Congress to facilitate "port buyback programs" to counter Beijing.

The business BlackRock is acquiring has port operations in Australia, Egypt, Mexico, Poland, Korea, Thailand, Sweden, Pakistan, Iraq, Oman, plus the United Kingdom, the Netherlands and the Bahamas. Hutchison isn't selling its mainstay Hong Kong terminals or port facilities in China.

Berg said a Wall Street firm is unlikely to coordinate closely with the U.S. government, as Beijing does with Chinese companies. But he said it is still comforting to know that Beijing won't have the same opportunities to intervene in these particular ports. "We've kind of taken those off the table," he said.

Seaports represent the most globalized dimension of China's expansive construction and management of infrastructure around the world. And Beijing claims port footholds on virtually every continent through its government-owned operators Cosco and China Merchants, which are both larger than Hutchison and explicitly run by Beijing.

New York-based Council on Foreign Relations last year found Chinese investment in 115 ports internationally, including the Hutchison facilities.

On top of boasting more warships than the U.S. Navy and a huge fleet of commercial vessels, China dominates shipbuilding and many aspects of seaborne container traffic such as managing port logistics databases and producing technologically advanced cranes that load vessels.

Its varied port interests deliver economic synergies for China -- the world's top trading nation -- but have also sparked concern in Washington that they could give Beijing military advantages, from fortifying supply lines to facilitating espionage and naval calls.

Trump hasn't made clear how far the BlackRock deal goes toward allaying his concerns. He touched on the Wall Street firm's port-purchase plan during his Tuesday address to Congress, before doubling down on criticism of the U.S.'s 1977 agreement to cede the canal to Panama and reiterating his intention to regain control: "We didn't give it to China. We gave it to Panama, and we're taking it back," he said.

Trump this week signaled awareness that the U.S. has fallen behind, pledging in his congressional address on Tuesday to establish a White House office to promote shipbuilding in the U.S.

"The United States' ability to produce naval vessels has atrophied greatly since the end of the Cold War and now pales in comparison to that of China," said Matthew Kroenig, senior director of the Atlantic Council's Scowcroft Center for Strategy and Security. The new administration has also proposed levying Chinese-flagged or -built containerships $1 million or more for each U.S. port call.

Panama anxiety

Signs of China's reach into the Americas are perhaps best exemplified by ports that its state-owned companies manage, including in Peru, Mexico and the Caribbean. But for decades, American politicians have been especially anxious about possible Chinese influence through Hutchison's two Panama ports now being sold, even though the facilities are operated to Western standards by a private Hong Kong company. Hutchison's controlling shareholder, 96-year-old billionaire Li Ka-shing, has a history of sometimes difficult relations with Beijing.

Hutchison denied that its pullback from the sector came in response to "recent political news reports," though governments in both the U.S. and Panama have pressured the firm in recent weeks following a fresh barrage of criticism from Trump.

"Superman knows when to flip a property, in this case definitely well in the money," said Matthew Flynn, a Hong Kong-based family-office adviser, referring to Li's nickname; Hutchison will generate $19 billion from the sale.

The Hutchison deal is "a positive step toward securing our economic future," said the chairman of the House Committee on Homeland Security, Mark E. Green (R-Tenn.). "If China maintains control of essential commercial port terminals, it could be a catastrophe," he said.

China's government says the port interests of its state-owned companies are commercial in nature. It has taken no public position on the BlackRock-Hutchison transaction. The companies haven't commented beyond an initial statement announcing their deal.

To little effect, the Biden administration for years twisted the arms of American engineers and financiers, including BlackRock executives, to bid for infrastructure projects around the world, say people familiar with the situation.

"It was not always easy to get U.S. companies interested in the Global South," said a former U.S. official involved in development programming, who noted Turkish, Spanish and Norwegian firms have tended to express more interest.

Write to James T. Areddy at James.Areddy@wsj.com

(END) Dow Jones Newswires

March 06, 2025 12:20 ET (17:20 GMT)

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