While global attention is focused on Iran's potential blockade of the Strait of Hormuz and the threat of closure in the Bab el-Mandeb strait in the Red Sea, another crucial maritime passage is emerging as a battleground for US-China trade.
Redaksiya reports that the US Federal Maritime Commission (FMC) has recorded an increase in the detention of Panamanian-flagged vessels in China since March 8, reaching approximately 70. Panamanian-flagged ships carry a significant portion of US maritime container traffic, and FMC Chair Laura Dibella has warned that China's actions could have significant commercial and strategic consequences for US shipping.
Chinese officials are not confiscating Panamanian-flagged vessels or cargo, but they are increasingly delaying ships for additional inspections. Approximately 4,600 Panamanian-flagged ships visit China annually. This move may be related to the US Supreme Court's decision to revoke the concession obtained in 1997 by Hong Kong-based CK Hutchison to operate the Balboa and Cristobal terminals.
The Panama Canal handles about 5% of global maritime trade and is one of six key strategic maritime passages, along with the Strait of Hormuz, the Bab el-Mandeb strait, the Strait of Malacca, the Suez Canal, and the Bosphorus and Dardanelles straits. The issue began with a plan by US President Donald Trump to "take back" the Panama Canal to weaken China's "Belt and Road" network and its trade with Latin America. In March 2025, Wall Street giant BlackRock made an offer to purchase over 40 ports, including CK Hutchison's Balboa and Cristobal, for approximately $23 billion. China intervened, citing its opposition to the "Belt and Road" initiative, delaying the deal. In July 2025, China's shipping giant COSCO announced its demand for a significant stake and veto power, stating that the deal would be blocked.
In connection with the halt of the deal, Panama – reportedly under US influence – revoked CK Hutchison's rights to operate the Balboa and Cristobal terminals in January of this year. Chinese state-owned companies have halted negotiations on new projects in Panama, while CK Hutchison has filed a lawsuit. Hutchison filed an international arbitration claim against Panama for $2 billion on March 24.
As China increasingly detains Panamanian-flagged vessels, the struggle continues, impacting Washington and its Wall Street allies.