 "Hong Kong tycoon Li Ka-shing waves goodbye to journalists after announcing his retirement as chairman of CK Hutchison Holdings Ltd at a news conference in Hong Kong, China March 16, 2018. Reuters")
China has reportedly instructed state-owned enterprises to pause any new business with companies linked to Hong Kong billionaire Li Ka-shing and his family, in what appears to be growing fallout from his firm’s decision to sell port assets near the Panama Canal to a US-led consortium.
The directive comes after Li’s conglomerate CK Hutchison agreed to divest most of its global ports business– including two facilities in Panama– in a deal with a consortium led by US investment giant BlackRock, Bloomberg reported.
The transaction, valued at over $19 billion, has sparked unease in Beijing amid escalating US-China tensions and concerns over control of strategic infrastructure.
The order was reportedly issued last week at the request of senior Chinese officials, with state-backed firms told to refrain from striking any new partnerships or commercial arrangements with Li’s businesses. Existing deals are not affected.
Scrutiny of Li empire intensifies
Chinese regulators have also begun examining the family’s investments, both domestic and overseas, in an effort to map the full extent of their financial interests.
CK Hutchison, a sprawling conglomerate with holdings spanning retail, telecoms, infrastructure and ports, has long been one of Hong Kong’s most prominent corporate players. But the politically sensitive nature of the Panama sale appears to have drawn the ire of Chinese authorities.
Over the past fortnight, pro-Beijing Hong Kong newspaper Ta Kung Pao has published a series of commentaries accusing Li’s firm of undermining China’s national interests.
The state’s Hong Kong and Macau Affairs Office has since reposted some of those articles on its official website– amplifying the criticisms and fuelling speculation that Beijing could intervene to derail the transaction.
Impact Shorts
More ShortsReuters cited a source as saying that Chinese regulators, acting under the direction of central leadership, have opened a review of the deal– a sign of Beijing’s growing discomfort with what it sees as a divestment driven by geopolitical pressure from Washington.
A geopolitical flashpoint
The ports in question sit close to the Panama Canal, a vital shipping artery that has long been a source of strategic interest for both the US and China.
US President Donald Trump has publicly endorsed the transaction, framing it as a win for US control in the region. He previously called for the removal of what he described as Chinese influence over the canal.
CK Hutchison’s share price rose as much as 3.6 per cent on Thursday following the initial reports, but pared gains to close up 1.2 per cent.
With inputs from agencies