Could US Forcing Panama To Exit China's Belt And Road Set Pattern?

The primary risks concerning China's influence over the canal, as outlined by the US , are the potential for the Chinese Communist Party (CCP) to control the canal and“shut it down.”

Washington has also expressed concerns that the CCP's access to dual-use port technology allows it to gather intelligence about US ships, such as transshipment patterns and naval routes. It also fears that China can exert an“economic chokehold” on the US in terms of the imposition of rate hikes on transit fees.

The first two points encompass the potential for China to use ports for naval purposes. But while the People's Liberation Army navy has access to Chinese-owned ports under domestic laws and policies, they require host country permission to use Chinese-operated foreign ports. These ports are also often ill-suited for military support and operations.

So the most probable risk concerns intelligence. If the CCP deems it necessary to national security, it may use the 2020 national security law to gather sensitive data from Hong Kong-based companies.

As for rate hikes, there have been recent increases in response to droughts, maintenance investments and demand. Following Rubio's visit, the US has claimed it is allowed to transit without paying fees.

This has been denied by Panama's President, José Raúl Mulino. The fees are equally imposed due to neutrality principles initiated in 1977. There is no evidence that China has played any role in these rate hikes.

In the unlikely event that CK Hutchison's concession is canceled, what would that mean for China's presence in Panama? China's investments in Panama precede Belt and Road, even if they have increased since the initiative's launch.

The country holds geostrategic importance due to its location and role in international trade. So it's a critical link for China's establishment of a regional gateway for its economic and political influence.

This includes securing raw material and energy resource imports and enhancing export capabilities. China's engagements in Panama include foreign direct investments (FDI), which amounted to around 0.8% in 2023 (compared with 3.6% by Spain and 19.6% by the US), primarily in the logistics, infrastructure, energy and construction sectors.

Most have been promoted as part of Belt and Road and faced renegotiation or cancellation for various – often geopolitical – reasons.

Since Belt and Road projects in the canal are already quite limited, withdrawing from the initiative is unlikely to result in significant short-term changes. CK Hutchison will only be“slightly affected” in case of a contract cancellation.

What's more, as the case of Brazil shows, a country can remain unaffiliated with Belt and Road and still receive Chinese investments.

Therefore, Chinese engagements will probably resume outside the Belt and Road framework. Still, even though China has shown restrained disappointment and argued that Panama has made a“regrettable decision ,” Sino-Panamanian relations may cool until Trump's attention has turned elsewhere.

Trump's rhetoric over the Panama canal may be exaggerated to appease a domestic audience rooting for a“strong man president.” But it also reflects decades of US concerns about China's growing clout.

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So the administration's focus on containing China is hardly surprising. Instead, it demonstrates Trump's broader“make America great again 2.0” strategy. Therefore, Panama's“BRI-xit” may bolster US resolve on“reclaiming” the Americas.

The Panamanian authorities seem caught between US pressure to limit China's influence and the economic boost provided by Chinese“pragmatic” investments. So, like their counterparts in other Belt and Road countries, they face tough choices in the coming years.

As the largest provider of foreign direct investment – US$3.8 billion per year – and the canal's biggest customer, the US has substantial influence and economic leverage over Panama. Conversely, China's interests and engagements in the country have increased, and Beijing has made it clear that it is patient and wants to continue cooperation and “resist external interruption.”

Protests have erupted in Panama over Trump's “muscular approach,” and residents have expressed strong reluctance to return to US rule. Therefore, the question remains whether this is the“great step forward” for Panama's ties with the US that Rubio suggests or whether Trump's actions will ultimately push Panama closer to Beijing.

Tabita Rosendal is a PhD candidate in China Studies at Lund University .

This article is republished from The Conversation under a Creative Commons license. Read the original article .

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