China Reportedly Asking State Firms To Halt New Projects In Panama In Retaliation For Unfavorable Canal Ruling

China is telling state companies to stop new projects in Panama in retaliation for an unfavorable ruling from the country's supreme court related to the canal.

The ruling in question annulled Hong Kong-based CK Hutchinson's contract to operate two ports at the canal. Axios noted that the lawsuit was introduced by the Panamanian government at the urging of the Trump administration and stemmed from an audit claiming that CK Hutchinson's management "shortchanged Panama by $1.3 billion."

People familiar with China's ensuing decision told Bloomberg that the move could have an impact worth billions of dollars. Beijing has also asked shipping companies to consider rerouting cargo through other ports if it doesn't mean much higher costs.

Other consequences involve stricter supervision of Panamanian imports to the country, including bananas and coffee. Elsewhere, the Hong Kong and Macau Affairs Office said in a social media publication that "China has sufficient means and tools, and sufficient strength and ability to defend a fair and just international economic and trade order."

If Panamanian authorities "insist on having their own way ... heavy prices both politically and economically will surely be paid!" the organization added. China also appeared to make a reference to the U.S., saying "some country has ... used bullying tactics to force other countries to obey their will."

A senior U.S. official, in contrast, celebrated the outcome, saying the supreme court's ruling is "not just a huge win for Panama's taxpayers, it's a big win for America and certainly for President Trump." The official added that Danish shipping company Maersk is expected to temporarily manage the concessions until Panama puts it out to bid.

The development is part of the Trump administration's intention to take over the Panama Canal, or at least have control over it.

Trump has repeatedly criticized the 1977 treaties under which the United States transferred control of the canal to Panama in 1999, suggesting the U.S. should take it back.

He has also suggested that China's commercial activity in ports near the canal constitutes a threat, calling for U.S. re-engagement.

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