Does China 'run' the Panama Canal as Trump says?

During his inaugural address, President Donald Trump doubled down on his claim that China controls the Panama Canal.

“China runs the Panama Canal and we didn't give it to China. We gave it to Panama and we're taking it back,” he said.

The 51-mile (82 km) long Panama Canal crosses the Central American country and is the main link between the Atlantic and Pacific oceans.

Up to 14,000 ships use it each year as a shortcut to a voyage that, before the canal was built, would have taken them on a long and expensive journey around the edge of South America.

Mentioning Panama in his inaugural address is not the first time he has focused on the Central American nation and its transoceanic canal.

On Christmas Day, Trump posted on social media that China's “wonderful soldiers” were “lovingly but illegally running the Panama Canal,” a claim that was quickly denied by authorities in Panama City and Beijing.

At the time, Panamanian President José Raúl Molino dismissed the claim as “nonsense”, stressing that there was “absolutely no Chinese interference” in the canal.

Trump has also threatened to retake the canal by force, citing “exorbitant” tolls allegedly charged to US ships to pass through it – another claim rejected by Panamanian authorities.

After Trump's inauguration speech, President Molino reiterated that there is “no presence of any nation in the world to interfere with our governance” of the Panama Canal.

The strategic waterway, which handles about 5 percent of the world's maritime trade, is managed by the Panama Canal Authority, an agency of the Panamanian government, not Chinese soldiers.

However, Mr. Trump's inaccurate claim reflects concerns among some US officials about China's significant investment in the canal and surrounding infrastructure.

Historically, the US has played a central role in building and administering the passage that connects the Atlantic and Pacific oceans.

After a failed attempt by the French to build it, the US secured the rights to undertake the project. The construction of the canal was completed in 1914.

It remained under US control until 1977, when then-President Jimmy Carter signed a treaty gradually handing it over to Panama, which Trump called “stupid”.

Since 1999 The Panama Canal Authority has exclusive control over operations on the waterway.

Treaties signed by both the U.S. and Panama state that it will remain permanently neutral, but the U.S. reserves the right to defend any threat to the canal's neutrality using military force under that deal.

There is no public evidence to suggest that the Chinese government exercises control over the channel or its military. However, Chinese companies have a significant presence there.

From October 2023 until September 2024 China accounts for 21.4% of the volume of cargo passing through the Panama Canal, making it the second largest user after the US.

In recent years, China has also invested heavily in ports and terminals near the canal.

Two of the five ports adjacent to the canal, Balboa and Cristobal, located on the Pacific and Atlantic sides respectively, have been operated by a subsidiary of Hutchison Port Holdings since 1997. this way.

The company is a subsidiary of publicly listed CK Hutchison Holdings, a Hong Kong-based conglomerate founded by Hong Kong businessman Li Ka-shing. It has port operations in 24 countries, including the UK.

It has port operations in 24 countries, including the UK.

Although it is not state-owned by China, said Ryan Berg, director of the Americas Program at the Center for Strategic and International Studies, there are concerns in Washington about how much control Beijing will be able to exert over the company.

A wealth of potentially useful strategic information flows through these ports for ships transiting the waterway.

“There are growing geopolitical tensions of an economic nature between the US and China,” says Mr Berg. “That kind of cargo information would be very useful in the event of a supply chain war.”

CK Hutchison did not respond to the BBC's request for comment.

Applications to operate these ports have faced almost no competition, according to Andrew Thomas, a University of Akron professor who has written a book about the canal. “At the time, the US wasn't particularly interested in these ports, and Hutchison didn't object,” he says.

Chinese companies, both private and state-owned, have also stepped up their presence in Panama through billions of dollars in investments, including a cruise terminal and a bridge to be built over the canal.

This “package of Chinese activities,” as Mr. Thomas described it, may have prompted Trump's claim that the canal is “owned” by China, but operating those ports does not equate to ownership, he stressed.

Beijing has repeatedly stated that China's ties with Latin America are characterized by “equality, mutual benefit, innovation, openness and benefits for the people”.

Panama's strategic location means China has been struggling to increase its influence in the country for years and expand its footprint in a continent traditionally considered the US's “backyard”.

In 2017 Panama severed diplomatic ties with Taiwan and established formal relations with China, a huge victory for Chinese diplomacy.

Months later, Panama became the first Latin American country to join China's signature Belt and Road Initiative, a trillion-dollar global infrastructure and investment initiative.

The Dominican Republic, El Salvador, Nicaragua and Honduras followed suit and also severed ties with Taipei in favor of Beijing.

China has slowly expanded its soft power by opening its first Confucius Institute in the country and providing a grant to build a railway. Chinese companies have also sponsored “media training” for Panamanian journalists.