Chu Kong Shipping Scandal Reflects Deep Rift Between Hong Kong Enterprises and the CCP.

The Panama Port transaction event in Panama continues to escalate. The initial indirect approach by the Chinese authorities through Hong Kong media and government has now evolved into direct intervention by regulatory agencies. This indicates that Hong Kong’s independent commercial operations are being influenced by Chinese interference, widening the gap between Hong Kong’s business elite and the Chinese Communist Party.

According to The Wall Street Journal, Xi Jinping was angered by Li Ka-shing’s Cheung Kong Group and leading American consortium BlackRock’s transaction involving the Panama Port operating rights. Xi had initially planned to use the Panama Port issue as a bargaining chip in negotiations with the Trump administration.

Bloomberg reported on March 18 that various Chinese government departments received directives from top national leaders to investigate whether Cheung Kong’s sale of overseas port business transactions involved security vulnerabilities or antitrust violations.

On March 27, Bloomberg reported that authorities had instructed mainland state-owned enterprises to temporarily suspend any new cooperation with Li Ka-shing and his family-related businesses.

On March 28, the South China Morning Post cited sources to report that Cheung Kong would not formally sign the agreement to sell the Panama Canal port operating rights on April 2 as anticipated.

The State Administration for Market Regulation of China announced on the same day that it was reviewing Cheung Kong’s transaction involving $23 billion.

The Chinese authorities taking direct action against businesses owned by Hong Kong’s richest is highly unusual. Hong Kong business leaders have always been targets of the Chinese Communist Party.

American economist Davy J. Wong told Epoch Times that Beijing is now highly alert to any cross-border transactions related to geopolitics. “In the past, Beijing mainly expressed intentions through pro-Communist media, rarely involving formal regulatory agencies in Hong Kong enterprises. This direct initiation of an antitrust review by the Market Regulation Bureau signifies that Hong Kong businesses are now treated similarly to American enterprises, both being viewed as untrustworthy by Beijing.”

He believes that this intervention reflects Beijing’s formal emergence of a strategy to intervene sovereignly in overseas strategic assets.

According to a report released by the Mercator Institute for China Studies (MERICS) last November, by 2024, the Chinese Communist Party is losing momentum in global port projects, ownership, and operations.

The report indicates that currently, the Chinese Communist Party has a presence in 110 ports in 67 countries, with Cheung Kong Group accounting for 33 of them. If Cheung Kong sells all its overseas ports, it would mean an instant 40% loss of this global strategic asset for the Chinese Communist Party.

The rift between Hong Kong’s business elite and the Chinese Communist Party has been evident as far back as the 2010s.

Since Xi Jinping took office in 2012, Li Ka-shing has been selling his mainland real estate holdings and channeling most of the capital into Europe.

At that time, the Chinese Communist Party accused Li Ka-shing of his divestment actions being a form of “betrayal” and “ingratitude.”

A recent analysis article by The Diplomat suggests that Beijing has always been suspicious of Hong Kong businessmen’s profit motives and lack of “patriotism,” and the sale of ports would deepen the Chinese Communist Party’s distrust of Hong Kong capitalists.

The article suggests that while Hong Kong capitalists are keen on maintaining close ties with Beijing to access economic opportunities in China, some are cautious about Chinese economic interventions.

Cheung Kong operates differently from state-owned enterprises associated with the Belt and Road Initiative, reflecting the “Hong Kong” spirit through its transparent and commercial practices, unlike state-owned enterprises. The Chinese Communist Party lacks direct control over it.

Li Ka-shing’s sale of Panama port assets once again demonstrates his precise grasp of capital market trends amidst global geopolitical shifts.

Chairman of the Hundred Schools of Strategy Think Tank and former member of the National Committee of the Chinese People’s Political Consultative Conference, Liu Mengxiong, wrote recently that the business and facilities of Cheung Kong Group’s overseas terminals are 100% private and corporate properties. Li Ka-shing sees the escalating trend of anti-globalization and downturn in maritime business, and this transaction is a business ensuring “safety first” behavior, without politicizing or demonizing it.

Davy J. Wong stated that both state-owned and private enterprises in mainland China find it challenging to escape the shadow of central management or rulers, as every industry is under the party’s control. Unlike mainland Chinese enterprises, Hong Kong companies operate under English common law legacy from the colonial era, embodying a spirit of contract and international perspective.

“In the past, Hong Kong enterprises sought to leverage the mainland market, and Beijing saw opportunities to use the advanced experience of Hong Kong capital enterprises, as well as a white glove in international forums, so they surveilled each other and mutually benefited.”

He believes that since Panama is the first country in the Americas to join the Belt and Road Initiative, Li Ka-shing’s ability to secure these ports should have received Beijing’s support as he was acting as their white glove.

“However, Hong Kongers’ thoughts differ from those in the mainland; their ideas are purely commercial and won’t obediently follow Beijing like state-owned enterprises.”

Wong pointed out that Li Ka-shing didn’t just sell these two ports but packaged all his foreign port assets for sale, indicating that Li Ka-shing no longer wants to engage in deep cooperation with Beijing but rather distance himself.

“This indicates a more profound issue that the longstanding tacit balance between Beijing and Hong Kong’s business community has been ruptured,” he said.

The Chinese Communist Party’s public pressure campaign against Cheung Kong indicates a heightened effort to disrupt Hong Kong’s independent business operations.

The interference in this transaction itself indirectly confirms Trump’s assertion of Chinese control over the Panama Canal ports.

Renowned Chinese expert Gordon Chang wrote on X platform: Blocking Cheung Kong and BlackRock’s sale of ports, including two ports in the Panama Canal area, affirms that the Chinese Communist Party controls every Chinese company.

Lin Song, a political science Ph.D. from the University of New South Wales in Australia, stated to Epoch Times that in mainland China, seemingly private enterprises have autonomy on the surface but not in reality. “If they want to deal with you, they will take back your management authority. From joint public-private ownership in the 1950s to subsequent nationalization, the Chinese Communist Party has always followed this practice.”

“Now by suppressing Li Ka-shing, which entrepreneur doing business in Hong Kong will not consider an additional political layer of concern? Will they dare to continue doing business in Hong Kong? If given an opportunity, they will all leave Hong Kong.”

“In addition, the Trump administration has also confirmed through this incident the Chinese Communist Party’s ambitions, leading to anti-China sentiments.”

Liu Mengxiong believes that Hong Kong, built on the foundations of freedom and rule of law as the “world’s freest economy,” is not a “frontline stronghold against the West.”

“As a result, can we ask, who will dare to invest in Hong Kong, whether they are international financial stakeholders, international trade operators, or major international shipping clients?”

These developments are a clear case of direct intervention by Beijing in Hong Kong enterprises, further shrinking Hong Kong’s economic autonomy.

For Hong Kong enterprises, this implies: first, future business decisions will no longer be purely commercial considerations; second, confidence in Hong Kong’s legal system and operational security by international markets will be significantly impacted; third, foreign enterprises may reassess the risks of Hong Kong as an international financial center; fourth, some foreign and local assets operating in Hong Kong may accelerate transfer or flee from the region.

“The future standing of Hong Kong as an international financial center and the status of a free trade port have gradually turned into an extension of Beijing’s political claims,” he said.

Lin Song mentioned that Li Ka-shing is currently facing pressure from the Chinese Communist Party, and businessmen conducting businesses in Hong Kong will consider an additional political layer in their decisions. Could they still dare to do business in Hong Kong in the future? If given the chance, they may all leave Hong Kong.

“Additionally, the Trump administration’s response to this incident has confirmed the Chinese Communist Party’s ambitions, so they will resist the Chinese Communist Party.”

Since the passage of the National Security Law for Hong Kong in 2020, Hong Kong has lost some political rights, and the current political pressure and investigations on Cheung Kong are setting a precedent for further encroachment on Hong Kong’s private sector, restricting Hong Kong’s economic freedom.

Zhang Xiqing, who participated in the anti-extradition movement and now resides in the UK, wrote on the X platform: In Hong Kong, no one can escape the control of the Chinese Communist Party. Any businessman who does not serve Beijing’s interests will face risks, as seen with the wealthiest billionaire Li Ka-shing.

“Hong Kong is no longer free, without autonomy, but under Beijing’s control,” she wrote.

The article by The Diplomat points out that any interference by Beijing not only confirms Trump’s allegations of the strategic role of Hong Kong enterprises against the Chinese Communist Party but also establishes a precedent for further encroachment on Hong Kong’s private sector. More industries in Hong Kong could find themselves in similar situations, where companies may be compelled to align with the political goals of the Chinese Communist Party, limiting their autonomy to pursue commercial interests.

Davy J. Wong believes that this is a clear case of Beijing’s direct intervention in Hong Kong enterprises, further diminishing Hong Kong’s economic autonomy.

For Hong Kong enterprises, this means: firstly, future commercial decisions involving Hong Kong capital will no longer be purely business considerations; secondly, international markets’ confidence in Hong Kong’s legal system and operational security will be significantly impacted; thirdly, foreign enterprises may reconsider the risks of doing business in Hong Kong as an international financial center; fourthly, some foreign and local assets operating in Hong Kong may expedite their transfer or exit from Hong Kong.

“The future international financial center position of Hong Kong, known for its economic freedom, is gradually becoming an extension of Beijing’s political claims,” he stated.

Lin Song stated that with Li Ka-shing currently under pressure from the Chinese Communist Party, businessmen conducting business in Hong Kong will consider an additional political layer in their decision-making. Will they still dare to do business in Hong Kong in the future? If given the chance, they may all leave Hong Kong.

“Furthermore, the Trump administration’s response to this incident has confirmed the Chinese Communist Party’s ambitions, leading to resistance against the Chinese Communist Party.”

Liu Mengxiong believes that Hong Kong, built on the foundations of freedom and rule of law as the “world’s freest economy,” is not a “frontline stronghold against the West.”

“As a result, can we ask, who will dare to invest in Hong Kong, whether they are international financial stakeholders, international trade operators, or major international shipping clients?”