Li Ka-shing’s ‘ruthlessness’ a symptom of China’s capital controls

After Donald Trump was elected US president, he immediately suggested to “take back control of the Panama Canal” because China is operating it. As the war of words intensified, it eventually came to light that the Panama Canal, which Trump claimed to be operated by China, is actually under the control of the highly internationalised CK Hutchison Holdings owned by the Li Ka-shing family.

Several years ago, the Li family progressively withdrew its capital from mainland China and Hong Kong, with 90% of its HK$1.138 trillion (US$146 billion) capital currently distributed all over the world. As Li and his sons are now Canadian nationals, neither Beijing nor the Li family considers CK Hutchison to be Chinese capital. 

The developments in March 2025 are more interesting: the US is not taking back the Panama Canal by military action; instead, US asset management giant BlackRock is acquiring CK Hutchison’s Panama Canal port operations. While global attention centres on Beijing’s reaction, few are exploring the reasons behind Li’s “ruthless” stance toward the city.

The Panama Canal is a vital maritime link connecting the Atlantic and Pacific Oceans, handling about 5-6% of global trade. The US is its largest user, accounting for approximately 73% of its cargo volume, while China accounts for 21%. 

In 2017, Panama severed diplomatic ties with Taiwan, recognising Taiwan as part of China, and joined China’s Belt and Road Initiative. Nearly 40 Chinese companies operate in various industries in Panama, including mining, finance, logistics and telecommunications. A 2021 report by Washington-based think tank the Center for Strategic and International Studies (CSIS) stated that China’s “increasing presence in and around the Canal has made the waterway a flashpoint for US-China competition over spheres of influence”.

After the 2024 US presidential election, Trump declared his intention to “take back the Panama Canal” even before his inauguration, in an attempt to block China’s control of this strategic waterway. This triggered a war of words among the US, Panama and China. On 4 March, Trump said that the US would be “reclaiming” the Panama Canal. He was referring to BlackRock volunteering to lead negotiations with CK Hutchison and securing a deal to acquire 43 ports worldwide in 23 countries, including Balboa Port and Cristóbal Port, which are at both ends of the Panama Canal.

Notably, BlackRock volunteered itself to the White House, not in favour of Trump, but as an act of goodwill in the political shift. Before the 2024 US presidential election, BlackRock was a political donor to the Democratic Party and an active supporter of the Democrat-led Environmental, Social and Governance (ESG) movement. In July 2018, Trump’s political control and influence as US president were limited when the ESG movement advocated by the Left wing was gaining traction. BlackRock’s chairman and CEO, Larry Fink, became a leading figure in the ESG movement when the company issued the BlackRock ESG Integration Statement to announce the incorporation of ESG standards into client investment portfolio management, integrating ESG with the company’s overall management process.

After Trump’s presidential election victory in late November 2024, 11 conservative states, led by Texas, filed lawsuits against BlackRock and other companies, accusing them of driving up energy prices through ESG investment strategies and violating antitrust laws. Only then did Fink begin to distance himself from ESG and instead promote “energy pragmatism”. He publicly remarked that world leaders still need both renewable energy as well as oil and gas. Before Trump took office, Fink reached a legal settlement with Tennessee attorney general Jonathan Skrmetti, marking the end of the ESG era for BlackRock.

As the world’s largest asset management firm, BlackRock has deep roots in Hong Kong and holds a 5.08% stake in CK Hutchison and an 8.9% stake in HSBC Holdings. Just when the Trump administration was considering mobilising and collaborating with private enterprises to resolve thorny geopolitical issues, Fink aligned himself with Trump’s needs, proactively sought an audience, and gained the approval to initiate contact with Li Ka-shing. Within a few weeks, the ports deal was agreed upon.

News of the agreement sparked Beijing’s anger and vehement public condemnation of the Li family for selling out the country and failing to prioritise national interests. On 13 March, the Hong Kong and Macao Affairs Office of China’s State Council reposted a commentary from China’s state-affiliated media Ta Kung Pao entitled “Don’t Be Naïve, Don’t Be Foolish”, denouncing CK Hutchison’s deal with the US. Not only does the commentary condemn the deal as “profit-driven and mercenary”, “disregarding national interests” and “a betrayal and sellout of all Chinese people”, it also warns Li to “rethink his position and which side he is on”.

This warning to Li, however, is of little use. It is an ironclad fact that Li made his fortune by relying on China. His capital withdrawal from China several years ago was a meticulously calculated choice weighing the pros and cons. Li is now willing to agree to this deal because, firstly, BlackRock’s offer is highly attractive, at a total value of US$22.8 billion for 43 ports comprising 199 berths and supporting assets under CK Hutchison. Secondly, as the control of the Panama Canal becomes the subject of geopolitical contest between the two superpowers, Li is more reluctant to offend Washington than Beijing because his investments span the globe, and the US has a far greater extraterritorial reach than China. Li’s intent is to cash out and exit, and distance himself from the US-China rivalry. Furthermore, as Li and his sons are now Canadian citizens and no longer identify as Chinese, accusing him of “selling out his country” is simply meaningless.

Unable to do anything about the deal, China has resorted to a few measures. First, both past and present Hong Kong chief executives have come forward to denounce the deal. Current Chief Executive John Lee has publicly expressed three points regarding the deal, stating that there have been extensive discussions in society about CK Hutchison selling its assets in Panama to a US company, and that “these concerns deserve serious attention”. Former Chief Executive Leung Chun-ying also joined in the reproach. 

Second, according to Bloomberg reports citing informed sources, China has told state-owned firms to hold off on any new collaboration with businesses linked to Li Ka-shing and his family, while government departments have begun investigating CK Hutchison’s planned sale of its Panama Canal port assets and operations.

Third, the Li family has been accused of ingratitude by many articles published on China’s domestic media. They argued that despite being a “private entrepreneur”, Li has long relied on monopolies in Hong Kong’s real estate and energy sectors, and in overseas ports and telecommunications. As these infrastructures are inextricably linked to society and livelihoods, Li’s success is inseparable from the Hong Kong government’s support. His real estate and various other projects in China are, of course, granted by the Chinese government, a charge that is largely accurate.

Despite Beijing’s anger, however, putting a stop to this deal will not be easy. China’s likely objective is damage control. Before the deal agreement, the Trump administration already prepared a draft executive order to impose special docking fees on Chinese-built or Chinese-flagged vessels, and urged allies to act similarly or face retaliation. As BlackRock has signed an agreement to acquire these ports, Trump may no longer need to rely on political pressure in the future. Instead, he can undermine China’s trade competitiveness with commercial measures, such as price hikes. Beijing is now more concerned about the various agreements between Chinese enterprises and CK Hutchison, and whether BlackRock will overturn them and re-negotiate.

China’s intellectuals have long praised the independence of capital from politics in the West, and I held this view as well two decades ago. However, with deeper understanding, I have come to the realisation that this perspective is superficial. The top US business elites are highly adept at political investments, and lobbying political circles is an important way to maximise one’s interests. 

Due to clear property rights in the US, the business elites do not face existential threats even if they fell out with politicians. Thus, the US government remains attractive to capital. In contrast, capital in China, including Li’s mainland ventures, must rely on the government or individual officials to secure critical resources. Furthermore, the government has never progressed beyond the Mao era approach towards private capital, which is the outmoded “use, restrict and convert” policy that expropriates private capital at any time. This is a fate from which private capitalists, like Jack Ma, are unable to escape.

In other words, capital in China must align with the government or officials to survive and grow. Yet this alignment is a relationship of mutual exploitation that lacks security. Once there is a change in the top leadership, policies will correspondingly shift and capital will often collapse with the ouster of the former leader and backer. In this institutional environment, despite becoming one of the richest people in Asia, Li would only see it as the consequence of mutual exploitation with Beijing, deeply fraught with insecurity.

This explains why BlackRock has proactively volunteered to cooperate with the US government’s geopolitical strategy, while Li disregards Beijing’s needs and focuses solely on his interests. The silver lining to this episode may well be that China abandons its obsolete approach to “use, restrict and convert” private capital and enacts legislation to protect private assets as sacred and inviolable.

This article was first published in Lianhe Zaobao as “从巴拿马港口交易看美中政府与资本关系”.

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