A decision by Hong Kong “superman” businessman Li Ka-shing, of CK Hutchison, to sell ports around the world, including critically two in Panama, has highlighted the extreme political risk facing businesses operating internationally, between China and the US.

Companies, large and small alike, should be mindful that this case has damaging implications, which will translate into tangible business risk in Greater China, Asia and around the world.

In particular, China’s freewheeling global business hub, Hong Kong, will undoubtedly be impacted by the friction associated with this transaction, whether or not it goes through as advocated.

Boards should now brace for a worsening outlook – conscious, though, that these unsettled times will also throw up opportunities for nimble companies, and those that can move fast.

SVA has a great deal of experience in helping businesses adapt to such political risks, and has previously set out advice as to how companies might respond to such rising levels of uncertainty.

The Panama situation

Having initially appeared wrong-footed, China’s leaders apparently instructed various agencies, such as the State Administration for Market Regulation (“SAMR”), to “examine” the sale of as many as 43 ports by CK Hutchison, an infrastructure business controlled by Hong Kong’s “superman” investor Li Ka-shing.

An earlier, vociferous article on 13 March 2025 in the Ta Kung Pao, a pro-Chinese Communist Party (“CCP”) newspaper, foreshadowed these measures. That article, which the central government’s Hong Kong and Macau Affairs Work Office republished on their website, called the 96-year-old Li “naïve and senile” in selling to US asset manager BlackRock – and for caving in to pressure from US President Donald Trump.

On the surface, and through a Western lens, the deal had looked shrewd. The ports are all outside of China, and the move makes commercial sense, as Li seemingly has doubts about the commercial outlook under Donald Trump’s administration, in the light of escalating trade friction. The touted sum of USD23 billion, including USD19 billion in cash, would amount to a very significant boon for CK Hutchison under normal market conditions.

However, the sale appeared to catch China’s Ministry of Foreign Affairs off-guard, and a significant reaction by Beijing to this proposed transaction is now quite likely.

After all, Chinese officials are acutely conscious of the strategic implications. The ports account for roughly 10.4% of global container throughput, and their sale could potentially raise the number of venues levying a US-planned surcharge on trade in Chinese-built vessels.

The sale has also become a highly emotive subject, given President Trump’s aggressive stance over Panama, and some Washington-based analysts’ triumphalist comments as to a US victory in this regard.

What is next?

The temptation for directors in smaller companies, or those in less sensitive sectors, may be to dismiss the Panama case as sui generis. After all, the deal relates to the “commanding heights” of the global economy, and drew the personal attention of President Trump.

To do so, though, would be a mistake. After all, this case makes clear not only that the political risks affecting those doing in business in the Greater China region are at their highest level in decades, but also that such risks show every sign of deteriorating.

In particular, the Panama ports issue seems likely to cause damage to the regional business climate.

One immediate, and obvious, casualty could be to Hong Kong’s reputation, as this case makes clear to the outside world, and to the USA in particular, that the city’s ostensibly semi-autonomous status is no longer intact.

Of course, criticism from outside Hong Kong since the 2019 protests had already called into question the city’s autonomy, but local authorities have nonetheless stressed the “One Country, Two Systems” framework – and in recent years a semblance of normality had returned under Hong Kong’s Chief Executive John Lee Ka Chui.

Now, the central Chinese and Hong Kong governments’ responses to CK Hutchison’s may dispel this perception.

The big beasts

Of further note is that the targeting of Li Ka-shing could raise wider questions about the outlook for Hong Kong’s other big businesses, such as HSBC, China Light & Power (“CLP”), Swire, and Jardine Matheson. After all, Li is by far the strongest of Hong Kong’s “big beasts”.

These conglomerates had long thrived as intermediaries between China and western markets – defining themselves as Hong Kong companies, and enjoying wide freedom of action. Now, though, that separate identity may prove hard to maintain.

These businesses may soon find themselves forced to choose sides, given their deep systemic importance. CLP, for instance, controls Hong Kong’s power supply and has invested in the Daya Bay nuclear plant in Guangdong province, and so may now perhaps need a mainland investor to secure Beijing’s continuing confidence.

Finance and the currency

Of additional concern is that the Panama case, and perceptions of Chinese vulnerability, could encourage the US to take further, much more aggressive, action against China’s financial sector – and Hong Kong would be front-and-centre in such an approach.

That prospect had already been mooted. The Wall Street Journal reported in April 2024 that the US Treasury had drafted financial sanctions against an unnamed Chinese bank, in response to its dealings with Russia. The Biden administration did not act, then, but such measures could come back to the table.

Needless to say, actions against even a small bank in China would chill Hong Kong’s financial system, as would ramped up compliance or other measures, which could cause “death by a thousand cuts”. Targeting a big bank, by contrast, could jeopardise the city’s financial system as whole.

HSBC’s anomalous position is of note here. That bank is an issuer of Hong Kong’s currency, and an account holder for many government agencies, and so is a financial institution of systemic importance for Hong Kong – and hence for China.

HSBC’s headquarters is in London, though, and the bank has previously found itself caught between China, the US, and Canada, as after the arrest of Huawei executive Meng Wanzhou in Vancouver in 2018.

Then, the US authorities refrained from excessive action against HSBC, perhaps in deference to British sensibilities. Whether the Trump administration would observe such niceties in the future is not clear.

A final target could be the Hong Kong dollar itself. After all, Hong Kong’s fundamental strategic importance to Beijing stems from its freely exchangeable currency, pegged in turn to the US dollar.

Should tensions worsen, it is perfectly possible that the Trump administration could act to undermine the dollar peg, so prompting capital flight from Hong Kong, and even leading to the extension of Chinese capital controls across the city.

For now, however, such prospects seem unlikely. Even so, businesses should bear in mind that such measures could come about in a crisis, and plan accordingly.

What to do

All told, the Panama matter makes clear just how fraught Sino-American relations have become.

Structural differences between the two big powers are so profound as to preclude improvement in the near term, notwithstanding President Trump’s telegraphing the “deal of the century” with China. The situation is inherently perilous.

Tensions will continue to flare up, manifesting themselves in various political, regulatory, commercial and other arenas, to the detriment of business. Military tensions over the Taiwan Strait, the South China Sea, and the Korean peninsula only add to the threats – as does President Trump’s public “diplomacy”.

Moreover, the Panama matter is not a standalone issue. Rather, this case may cause damage to the business environment in Hong Kong and Greater China – and is a warning of what might come.

A temptation for some executives will be to see these risks as applying only to strategically important, or high technology, companies – and they would not be wrong to see the threat as more acute at that level.

Yet boards of smaller companies, or those in less sensitive areas, should not be complacent. Ordinary disputes over labour issues, non-payment, or other workaday matters might easily flare into “national security” matters in this noxious climate – justifiably or otherwise.

That is not to say that there are no opportunities in the China market. Rising share prices, government efforts to bolster the property market, and measures to encourage personal consumption are all encouraging a “China put”.

To benefit from those opportunities, though, and to protect existing interests, companies do need to take full account of the political risks, and think through the longer term implications of any actions.

SVA has a great deal of experience in handling such risks, and in providing such services in Hong Kong, Greater China and across Asia, and stands ready to assist as needed.

SVA

SVA (www.stevevickersassociates.com) is a specialist risk mitigation, corporate intelligence and risk consulting company. SVA has a wealth of experience in asset search activities, around the world.

The firm serves financial institutions, private equity funds, corporations, high net-worth individuals and insurance companies and underwriters around the world. SVA’s staff have a wealth of experience in investigating and dealing with asset searches, political risk assessments, litigation support, fraud and financial crimes.

If you seek such services, please do not hesitate to contact us at the numbers below. We can be of assistance to your organisation in handling these complicated issues.