Center for Strategic and International Studies
Q2: What is China’s influence in the Panama Canal?
A2: Chinese companies have been heavily involved in infrastructure-related contracts in and around the Canal in Panama’s logistics, electricity, and construction sectors. These projects fit naturally with China’s BRI vision, onto which Panama was the first Latin American country to
sign in 2018. This, along with Panama’s recognition of China, boosted China’s already existent footprint in the Canal, and Chinese companies have since positioned themselves at either end of the Panama Canal through port concession agreements. In 2016, in a $900 million deal, the China-based Landbridge Group acquired control of
Margarita Island, Panama’s largest port on the Atlantic side and in the Colón Free Trade Zone, the largest free trade zone in the Western Hemisphere. The deal established the Panama-Colón Container Port (PCCP) as a deep-water port for megaships, and the construction and expansion was
carried out by the China Communications Construction Company (CCCC), a company also active in China’s island-building initiatives in the South China Sea, and the China Harbor Engineering Company (CHEC). The location of the port on the Canal has since allowed China to capitalize on Canal expansion. Additionally, in March 2021 the Panamanian government
began the process of renewing the lease of Hutchison Ports PPC, a subsidiary of Hong Kong–based CK Hutchison Holdings, which serves as operator for the ports of Balboa and Cristobal, two major hubs of the Canal’s Pacific and Atlantic outlets, respectively.
Furthermore, in 2018, a Chinese consortium led by CHEC and CCCC
announced it was awarded a $1.4 billion contract for the Canal’s fourth bridge, which then-president Varela
called “the fifth most important project in the history of the country.” More recently, China Construction Americas finished the Amador Convention Center along the Pacific side of the Canal, a project contracted under the Varela government and
funded by Chinese loans. China has also invested in energy-related facilities along the Canal. For example, the Chinese group Shanghai Gorgeous
invested $900 million to build a natural gas–fired electricity generation facility. As an economic foothold into Latin America, the Panama Canal is no doubt an important
gateway for China’s bid for broader presence and a logistical hub for Chinese goods entering the region.
