Why China Really Wants the Panama Canal

In news that should be setting off alarm bells in Washington, a new report out this week details how China is one of several countries interested in building two new ports along the Panama Canal. The move is a direct challenge to American influence in the region – and a military threat to the United States.

Going all the way back to the Monroe Doctrine in the early 1800s, the United States has long asserted its status as the sole superpower in the Western Hemisphere. But as Communist China has now risen to become a new superpower, Beijing has sought to counter the U.S. presence in Central and South America.

That includes on the Panama Canal, through which about 40 percent of all U.S. container traffic – $270 billion in cargo – traverses each year. The canal cuts transit times from the Atlantic to the Pacific from weeks to days. For cargo ships leaving from Houston bound for Japan, the canal cuts about 8,000 nautical miles out of the journey.

Earlier this year, President Donald Trump had floated his interest in the United States reclaiming operational control of the Panama Canal as a matter of U.S. economic and military security. “China is operating the Panama Canal,” the President said in his inaugural address. “American ships are being severely overcharged and not treated fairly in any way, shape, or form. And that includes the United States Navy. We didn’t give it to China. We gave it to Panama, and we’re taking it back.”

As Trump alludes to, the Panama Canal was a U.S. project that stands as a testament to American ingenuity and resolve. It was made possible by savvy diplomacy from President Teddy Roosevelt and the incredible efforts of 40,000 workers toiling in hellish jungle conditions. Thousands of workers perished from accident and disease, including hundreds of American-born laborers.

When the canal was complete, the newly independent nation of Panama granted operational rights of the canal to the United States in perpetuity. Roosevelt correctly saw the canal as equally significant as the Louisiana Purchase in terms of the implications for American power and commerce. He referred to its construction as “a feat to which the people of this republic will look back with the highest pride.”

But less than a century later, U.S. leaders had abandoned that wisdom. Under the terms of a treaty signed by President Jimmy Carter in 1977, the United States ceded control of the canal to Panama on December 31, 1999.

That decision looks horrendously foolish in hindsight, as it has allowed China to gain a foothold around the canal. Chinese firm CK Hutchison Holdings already operates ports on each end of the waterway. In March, the company agreed to transfer control of both ports to a U.S.-based conglomerate, but the deal has not yet been finalized.

Rep. John Moolenaar (R-MI), chairman of the House Select Committee on China, has previously stated that “China’s malign influence in our hemisphere must be stopped, and any deal on the Panama Canal must preclude any Chinese companies from taking part.” But an emboldened Beijing has not heeded that demand and now looks to reassert its presence in the region.

Dr. Reynaud Dudoussat, a former French diplomat in South America who is also a historian, told me in an interview that for China, controlling the Panama Canal is symbolically significant as much as it is strategically significant. “History leaves no doubt that the canal is symbolic of America, and even if it may not be as profitable as in the past, it remains a gateway to the world for U.S. trade,” he said. “It strongly embodies the American spirit.”

But Chinese dissidents I spoke with made clear their belief that Beijing’s interest in the canal is primarily militaristic. One former Chinese naval commander who defected in the late 1980s said that CK Hutchison’s purchase of ports on either side of the canal was a “People’s Liberation Army initiative approved by Deng Xiaoping,” who led China from 1978 to 1989. For Beijing, “trade is secondary; the focus is on surveillance, influence operations, and potential surprise attacks,” he said. “All PLA ships, overt and covert, are heavily armed and equipped with surveillance systems. America should be concerned.”

If Washington fails to take these warnings seriously, it risks sleepwalking into a world where America’s most vital commercial artery is effectively under the shadow of a hostile foreign power. China’s designs on the canal are not about commerce or convenience – they are about leverage. Beijing understands that whoever influences the canal influences the flow of global trade, U.S. naval power, and the economic lifeline of the Western Hemisphere.

The United States cannot afford to cede that ground. Reasserting American leadership, strengthening alliances with Panama and regional partners, and blocking further CCP encroachment must be treated as matters of urgent national security. The stakes could not be higher. Control of the Panama Canal is, and always has been, a test of whether America intends to remain the dominant power in its own backyard.

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