Beijing's criticism of CK Hutchison's decision to sell its ports business signals an increase in political scrutiny of significant Chinese business divestments involving American buyers, analysts suggest. The deal, which includes the sale of assets near the Panama Canal to a BlackRock-led consortium, has raised concerns particularly regarding a potential sale of TikTok's U.S. assets, owned by Chinese firm ByteDance.
U.S. President Donald Trump previously expressed his discontent over perceived Chinese control of the Panama Canal, labeling the deal as a "reclaiming" of the canal shortly after the transaction was announced. A week later, the Hong Kong and Macau Affairs Office in China published commentaries criticizing CK Hutchison, asserting that the sale neglected national interests.
Chinese regulators, acting under directives from central leadership, have initiated inquiries into the deal, signaling Beijing's dissatisfaction with CK Hutchison's divestment amid perceived U.S. pressure. The source who provided this information chose to remain anonymous due to the sensitive nature of the issue. China's State Council Information Office, which addresses media inquiries for the government, did not respond to requests for comment, nor did CK Hutchison, with Bloomberg being the first to report on the developments.
In its earnings statement, CK Hutchison did not reference the ports deal but mentioned that "geopolitical and trade tensions have ... risen significantly." The political ramifications of the CK Hutchison deal and the potential sale of TikTok's U.S. operations are expected to exert considerable influence on future agreements between Chinese and American firms amid escalating tensions between the two nations.
Patricia M. Kim, an expert on U.S.-China relations and fellow at the Brookings Institution, noted that Beijing is attempting to navigate multiple priorities—projecting strength against U.S. pressure while avoiding the appearance of weakness domestically. She indicated that scrutiny of the CK Hutchison deal fits into a broader strategy by Beijing to adopt a more assertive tone toward the United States, particularly in response to trade actions taken by the Trump administration.
The decision from Beijing regarding whether to complicate the port transaction or similar deals like TikTok's may depend on how viable a trade deal with the Trump administration appears. Chinese officials have communicated to ByteDance leaders that Beijing prefers the company not be forced to cede control of the app to U.S. investors.
Reports have emerged that President Xi Jinping was angered by CK Hutchison's sale and the lack of consultation with Beijing ahead of the transaction. Chinese leadership had intended to leverage the Panama port issue during negotiations with the Trump administration but was taken aback by the unexpected sale.
Since Trump’s inauguration, Beijing has sought to counterbalance U.S. tariffs while keeping open the possibility for discussions aimed at de-escalating tensions. Approval for asset sales like TikTok could be considered as part of a broader agreement to reset relations if negotiations progress positively.
While some experts argue that Chinese regulatory oversight of the CK Hutchison deal is limited since none of the ports are located in China or Hong Kong, legal analysts maintain that Beijing could still exert influence. TikTok faces potential shutdown in the U.S. if ByteDance cannot secure a buyer, complicating the app's need to demonstrate autonomy from both the parent company and the Chinese government.
In the TikTok sale process, the White House is taking on a role akin to that of an investment bank, with Vice President JD Vance overseeing the auction, marking a notable uptick in government involvement in private business matters. In contrast, ByteDance is significantly dependent on its domestic market, engaging in areas such as video streaming, news aggregation, e-commerce, and artificial intelligence.
Notably, the Chinese government possesses a 1% stake in one of ByteDance's key subsidiaries through a "golden share," which was communicated to U.S. senators in a letter from TikTok in 2022. Analysts caution that if ByteDance were to acquiesce to any enforced sale of TikTok without Beijing's approval, it could face both regulatory challenges and political backlash from the Chinese government.
Steve Vickers, CEO of a political and corporate risk consultancy, mentioned that the ByteDance situation might eventually play a role in broader negotiations. He warned that the implications of the CK Hutchison case pose significant risks that could affect businesses worldwide, particularly in Greater China and Asia.