China Losing Ground in Latin America as Panama Canal Slips Away

While all attention is on Iran as U.S. military strikes continue there, developments much closer to the American homeland are also shaking up the global balance of power. Following a months-long power struggle and extensive involvement from the Trump administration, China’s ambitions of dominating the Panama Canal appear to be on life support.

Late last month, the Panamanian government formally seized control of the key Balboa and Cristóbal ports at either end of the Panama Canal, wresting them from Hong Kong–based conglomerate CK Hutchison Holdings. The company said that government officials had “made direct physical entry into the terminals at Balboa and Cristóbal” and assumed “administrative and operational control.” According to a government decree, the Panama Maritime Authority has been authorized to occupy the ports for “reasons of urgent social interest.”

The move on the ports followed a ruling in January from Panama’s Supreme Court declaring unconstitutional the concession held by CK Hutchison’s local subsidiary, Panama Ports Company, to operate the strategically vital terminals, through which about 40 percent of all U.S.-bound container traffic flows.

CK Hutchison is a sprawling multinational company controlled by billionaire Li Ka-shing, with major global infrastructure and shipping assets. In recent years, the company had moved to solidify and potentially restructure its control of dozens of international ports, including those flanking the Panama Canal.

For U.S. officials, the arrangement posed a serious national security concern. Though based in Hong Kong, CK Hutchison operates under the shadow of Beijing’s sweeping national security laws, meaning that the Chinese Communist Party (CCP) exerts significant leverage over one of the world’s most critical maritime chokepoints. Accordingly, during his 2024 campaign, President Donald Trump promised to stop any Chinese ambitions in or around the Panama Canal.

The January decision by Panama’s Supreme Court invalidated the concession agreement to CK Hutchison, setting the stage for Panama’s takeover and marking a major setback for China’s strategic foothold in the Western Hemisphere. The news is also a major victory for President Trump.

Chinese leaders are predictably outraged over the sudden collapse of the deal. The Chinese government’s Hong Kong and Macao Affairs Office has described the Panamanian government’s actions as “absurd” and “shameful,” warning that the Latin American country would pay “heavy prices both politically and economically.”

“China will take all measures to protect the lawful rights and interests of Chinese companies,” Foreign Ministry spokesman Guo Jiakun said. Professor Li Baizhao, a former CCP Central Committee legal counselor who defected in the early 1990s, told me in an interview that Jiakun also holds “a high-ranking position within the Party’s propaganda department,” although this role is concealed from the public.

Former Chinese intelligence official Colonel Hucheng, now a dissident, called the loss of the Panama Canal deal “a devastating setback for war planning.”

“Since the 1980s, Panama was the goal,” he said. “It became a pillar for the PLA. Most PLA investment in Latin America was tied to Panama. This explains their fury.” Hucheng also said that controlling the Panama Canal plays a “key role” in the CCP’s plan to cut off trade and isolate the United States in the event of an armed conflict.

But Panama is only one piece of a much larger geopolitical puzzle – albeit a very important one. In recent months, Beijing has watched as several of its most important partners have come under intense pressure from Washington in a development that could dramatically weaken China’s global posture.

Earlier this year, U.S. forces captured Venezuelan dictator Nicolas Maduro, long one of the CCP’s closest allies in the Western Hemisphere. For years, Beijing relied heavily on Venezuelan oil exports, not only to fuel its vast industrial base but also to help supply the energy needs of its rapidly modernizing military.

China extended billions of dollars in loans and investments to Caracas, securing preferential access to crude oil in return. With Maduro removed and Venezuela’s political future uncertain, that pipeline of influence and energy has been thrown into doubt.

Now, U.S. strikes on Iran threaten yet another pillar of Beijing’s strategic network. Iran is one of China’s top oil suppliers and its closest diplomatic partner in the Middle East. The two regimes have deepened economic, military, and intelligence cooperation in recent years, united by shared hostility toward the United States. Beijing has sharply condemned the American strikes, recognizing that instability in Iran jeopardizes both its energy security and its broader Belt and Road ambitions across Eurasia.

Taken together, these developments represent a striking display of force against some of China’s most critical economic and geopolitical supports. From Latin America to the Persian Gulf, Trump is targeting regimes that have helped fuel Beijing’s rise. Whether by design or by consequence, the result is that China faces mounting pressure on key trade routes, energy supplies, and strategic partnerships.

If this is part of a broader Trump strategy, it is one aimed squarely at the foundations of China’s power. By undercutting the regimes that sustain Beijing’s economy and military expansion, the United States gains leverage — and sends a clear message that the era of unchecked CCP expansion may be coming to an end.

Ben Solis is the pen name of an international affairs journalist, historian, and researcher.