The Sandinista regime passed it in violation of the country’s constitution plus trampling the rights of the indigenous and other landowners. If the Sandinistas lose power, the whole project implodes.
Note that it isn’t the Chinese government backing this project. It is a pet project of an eccentric Chinese billionaire who can afford to lose his investment.
http://latino.foxnews.com/latino/money/2013/07/31/us-willing-to-invest-in-new-nicaragua-canal-to-rival-panama-canal/