China told Maersk and MSC to drop Panama port operations

{"text":[[{"start":11.89,"text":"China demanded Europe’s two largest shipping companies cease operating ports on the Panama Canal, just weeks after they took over from a Hong Kong-based group that was ejected from the terminals."}],[{"start":23.33,"text":"In a meeting with China’s state planner last month, Danish shipping group Maersk and Switzerland-based Mediterranean Shipping Company were told to withdraw from the Balboa and Cristóbal ports immediately, said two people familiar with the talks."}],[{"start":39.87,"text":"They were also told not to “engage in illegal activities that harm the interests of Chinese companies, and to uphold commercial ethics and international rules”, said a third person."}],[{"start":52.56999999999999,"text":"The warnings underscore Beijing’s growing willingness to use its economic leverage over foreign companies in areas it sees as critical to China’s supply chain security."}],[{"start":64.25,"text":"The move also signals an escalation in the dispute over the Panama port concessions. The US has been trying to increase its influence over the canal while Beijing is keen to defend investments by Chinese companies in the strategic waterway."}],[{"start":null,"text":"

"}],[{"start":79.3,"text":"CK Hutchison, founded by Hong Kong’s richest man Li Ka-shing, negotiated a $23bn deal with a consortium led by BlackRock and MSC in March last year to sell its non-Chinese port operations, including those in Panama."}],[{"start":98.89,"text":"The deal immediately irked Beijing, which signalled it would subject the transaction to regulatory reviews and pushed for state-owned shipping group Cosco to join the consortium."}],[{"start":110.38,"text":"Tensions escalated in January when Panama’s top court ruled CK Hutchison’s concession to run the two ports unconstitutional and authorities later stripped the company of its rights."}],[{"start":122.86999999999999,"text":"Panama granted MSC and Maersk temporary operating rights. CK Hutchison has since taken Maersk to arbitration and filed a $2bn damages claim against Panama."}],[{"start":135.79999999999998,"text":"Early last month, officials at China’s powerful National Development and Reform Commission reacted by summoning the two European companies and demanding they pull out of the ports, said the two people familiar with the meeting."}],[{"start":150.19,"text":"The NDRC demands were delivered on the same day China’s transport ministry warned the two companies of the need to maintain supply chains amid disruption from the war in Iran."}],[{"start":162.78,"text":"Maersk and MSC have argued their temporary concessions are necessary to keep trade flowing through the Panama Canal, the people said, adding that outreach was being conducted by top executives at both groups."}],[{"start":177.23,"text":"Maersk chief executive Vincent Clerc attended a meeting with NDRC officials in Beijing on March 20, while MSC president Diego Aponte has been communicating with the regulator through written correspondence, they said."}],[{"start":192.76999999999998,"text":"One person familiar with the talks noted that if the European companies pulled out, US operators were the most likely to take over the concessions, an outcome that would be worse for Beijing."}],[{"start":205.90999999999997,"text":"China has been strengthening its legal toolkit to defend supply chain security. This month, it introduced sweeping regulations that make it illegal to “harm the security of the country’s industrial and supply chains” and raised the spectre of exit bans for violators."}],[{"start":224.08999999999997,"text":"This week, authorities also introduced new rules to counter what they describe as “undue extraterritorial jurisdiction” by foreign governments, giving Beijing broader scope to assess such actions and impose retaliatory measures across areas including trade, investment and international co-operation."}],[{"start":245.06999999999996,"text":"Maersk, MSC, the NDRC and transport ministry did not respond to requests for comment."}],[{"start":252.40999999999997,"text":"Additional reporting by Cheng Leng in Beijing"}],[{"start":266.78,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1776251617_1370.mp3"}