China warns Panama after court annuls CK Hutchison contract

China's Hong Kong and Macau Affairs Office warned Panama of "heavy prices" after Panama's Supreme Court annulled CK Hutchison's contract to operate two Panama Canal ports; Panamanian authorities had not responded and the next steps are undetermined at this time.

Panama's Supreme Court last week annulled a long-standing contract held by Hong Kong-based CK Hutchison's subsidiary to operate container terminals at the Pacific and Atlantic entrances of the Panama Canal. China's Hong Kong and Macau Affairs Office described the ruling as "absurd" and "shameful and pathetic" and warned that Panama would face "heavy prices" politically and economically. Panamanian authorities did not immediately respond to requests for comment. The decision also intersects with a proposed US$23-billion sale of ports by CK Hutchison and drew reactions from U.S. officials. Key facts: - Panama's Supreme Court annulled the contract that Panama Ports Company, a CK Hutchison subsidiary, had held since the 1990s to operate two canal terminals. - China's Hong Kong and Macau Affairs Office called the ruling "absurd" and warned of "heavy prices," saying it would defend the interests of Chinese firms. - Panamanian authorities did not immediately respond to requests for comment, and CK Hutchison said the ruling was inconsistent with the legal framework under which it operated. - The decision could affect CK Hutchison's proposed US$23-billion sale of 43 ports and was noted positively by some U.S. officials. Summary: The court annulment has increased diplomatic tensions between China and Panama and could disrupt CK Hutchison's planned ports transaction. Chinese authorities have signaled a firm stance while Panama's response and any legal or procedural next steps have not been announced. Undetermined at this time.