“We didn’t give it to China. We gave it to Panama, and we’re taking it back.” Thus spoke Donald Trump shortly after BlackRock, an American investment firm, announced on March 4th that it would buy two ports on the Panama Canal from ck Hutchison (ckh), their Hong Kong-based operator. China’s initial response was strikingly muted, given the genesis and scope of the deal, which covers a total of 43 ports in 23 countries.

A fortnight later, clearer signs of China’s disapproval are emerging. So, too, are suggestions of regulatory scrutiny by Chinese authorities. Neither is likely to deter Mr Trump: in the last few days he is reported to have asked the Pentagon for military options to ensure American access to Panama’s canal. The question now for many involved is how far China is willing to go to resist a $23bn deal that would almost halve its global port network and potentially reshape world maritime trade.

The first indication of stiffer dissent came on March 13th, when the website of a Chinese government office overseeing Hong Kong reposted a scathing critique of the deal. It was “spineless” and “sold out all Chinese people,” said the commentary, which was originally published in Ta Kung Pao, a pro-China newspaper in Hong Kong. Firms involved should “consider whose side they stand on”, it added, warning that the deal could hurt China’s maritime trade and its Belt and Road global infrastructure scheme.

The Chinese government’s amplification suggested official endorsement. Hong Kong’s chief executive, John Lee, compounded the effect on March 18th, when he said public concern about the deal deserved “serious attention”. The Wall Street Journal then reported that Xi Jinping, China’s leader, was angered by the deal; and Bloomberg said mainland agencies were looking for potential security or antitrust breaches.

Yet none of China’s central propaganda outlets or government offices has directly condemned the deal. A Chinese delegation visiting Panama at the weekend kept a low profile, too, suggesting Mr Xi is still weighing his options. His officials are trying to deflect Chinese social-media outrage towards ckh and its owner, Li Ka-shing, who fell out of favour with China’s leadership when he started selling his properties on the mainland over a decade ago.

Chinese authorities do not appear to have formal regulatory authority to block the deal, which excludes ckh’s ten ports in Hong Kong and the mainland and is, the company says, “purely commercial”. Informally, China has more ways to put the heat on ckh’s board or other governments that may need to approve an American takeover of ckh ports on their territory. Some of them, such as Pakistan and Myanmar, are friendlier with China than America.

But trying to torpedo the deal is risky for China, too. It would heighten tensions with America just as they are planning reciprocal leaders’ visits. It would also lend weight not just to Mr Trump’s exaggerated claim that China “operates” the Panama canal but to broader international security concerns about Chinese ports, including ckh ones in Europe and Australia. And following controversies around firms such as Huawei and Bytedance (TikTok’s owner), it could also intensify scrutiny of China’s influence on its private companies.

Nor are the deal’s strategic costs as great as they first appear for China. Take the military dimension. The global port network that Chinese companies began building two decades ago now includes 93 foreign ports in 50 countries, where they own or operate at least one terminal, according to Isaac Kardon of the Carnegie Endowment for International Peace, a think-tank. His research shows how China’s navy uses these ports, concentrated around its main trade routes and global maritime chokepoints, to supplement its sole overseas military base in Djibouti.

Ruling the waves

In 2023, for instance, Chinese warships visited 27 overseas ports, several of them Chinese-controlled. Such stopovers, which have included ckh ports, help China to build defence ties and repair or replenish warships during peacetime operations, such as anti-piracy patrols in the Gulf of Aden. China could also secretly position security personnel and equipment to keep an eye on or impede other countries’ civilian or military supply chains.

But, even in peacetime, naval visits usually need approval by the host government. In some countries, Sri Lanka for example, Chinese warships do not dock at Chinese-operated terminals. And in a war, getting that permission becomes harder as it risks making the host country a belligerent under international law and a military target. Most container ports also lack specialist naval facilities and China would have to pre-position military personnel and equipment to support combat operations.

So ckh’s Panama ports do represent a limited potential threat to American security interests, even though Chinese warships have not actually used them. Others do, too, including one just south of the Suez Canal and another at an Egyptian naval base near its north end. Still, if China actually wanted to block American forces in either place, it could simply engineer an accident like the one that closed the Suez Canal in 2021. And since ckh is more transparent and commercially driven, it is less pliant than the two state-run firms that own or operate the other 50 ports in China’s network, many of which are also in strategic locations.

The commercial implications are more profound, say Mr Kardon and others studying the issue. The deal could allow America to use its influence, as China has, to shape global maritime trade through agreements guaranteeing cargo flows or preferential access to ports. Combined with other measures, such as proposed fees on Chinese-built ships using American ports, it could also help curb China’s exports to America, including those via Mexico, where ckh owns four terminals.

But those efforts, which aim to revive American exports and shipbuilding, may not succeed, suggests Jacob Gunter of the Mercator Institute for China Studies, a Berlin-based think-tank. Even if the deal goes ahead, China will still have sway over maritime trade through its dominance of shipbuilding and shipping, and its remaining ports. Besides, a smaller port network might not be a bad thing if profits are hit by an expected slump in global trade.

The deal is also attractive for ckh, which has recently scaled back its port business. BlackRock’s offer represented a large premium on ckh’s market value: its share price rose by 22% on the day the deal was announced (and closed down by 6% after the first Ta Kung Pao diatribe).

That leaves the politics. Mr Xi’s reported displeasure is understandable, given his image as a muscular leader capable of challenging America and defending China’s global interests. Chinese officials thus worry about appearing weak or unresponsive, says Zongyuan Zoe Liu of the Council on Foreign Relations, a think-tank in New York. Mr Xi also wants private Chinese companies to be more “patriotic” without government intervention.

Still, his current priority is to avert a full-scale trade war with America, since its impact on China could be more damaging for him. He may hope to reach an accommodation over Taiwan, too. Seeing Mr Trump’s preoccupation with Panama, there could also be leeway to carve out some ports from the deal during the 145-day window for exclusive negotiations. Conceding will be painful for Mr Xi. But resistance, in this case, could be more so.