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China’s advance in Panama: An update

https://theglobalamericans.org/2021/04/chinas-advance-in-panama-an-update/

Excerpt:

...Canal related projects

Although Chinese companies initiated or began to explore a significant number of projects related to the Panama Canal and other infrastructure, the vast majority have been delayed, canceled, or scaled back under the Cortizo administration.

On the Atlantic side of the canal, near Colón, the Chinese Landbridge consortium— known as the Landbridge Group—committed to a USD $1 billion investment for a new container port known as the Panama-Colón Container Port (PCCP), oriented toward supporting the large neo-Panamax vessels that China was sending through the canal with increasing frequency. Some feared that Landbridge could ultimately buy out the neighboring Evergreen port facility and leverage preferential treatment by the China Shipping Group and Chinese companies to displace the dominant Manzanillo International Terminal (MIT) port. In the end, however, Evergreen did not sell its facility, but rather made significant investments in a logistics park with warehouse facilities to expand its operations.

Near the end of 2019, even before the COVID-19 pandemic, there was a significant drop-off in construction at the PCCP facility, leaving the new pier about 25 percent complete. In June 2020, the controller of the Shanghai Gorgeous Group, Gao Tianguo, was arrested in Shanghai on fraudulent lending charges, further contributing to the project’s suspension. Nonetheless, dredging vessels continued to be present at the site at the end of 2020, suggesting the continuation of some degree of operations.

With the paralysis of the PCCP, related projects involving the 441 MW USD $900 million gas-fired “Martano” power plant were also stopped. The power plant, although some distance away from the PCCP, could have used liquid natural gas (LNG) from the large tankers that the PCCP would have been able to service.

A fuel bunkering project that was undertaken by a Chinese petroleum company, done in support of Chinese shipping operations, also appears to have been put on hold.

Separately, in March 2021, the Panamanian government moved toward renewing the lease for the Chinese company Hutchison Port Holdings to operate ports in Cristóbal and Balboa. The Cortizo government was criticized, however, for not having done more to take advantage of the lease renewal to negotiate better terms from Hutchison.

On the Pacific side of Panama, Hutchison continues to have a strategic advantage, with its port there connecting directly to the Atlantic via the Kansas City rail line-operated trans-Panama railroad, giving it an advantage over the neighboring PSA port near Panama City. Although Kansas City Railroad was once rumored to be seeking to sell the rail line, the company’s acquisition by Canadian Pacific, and the synergy between the line and the parent’s other rail lines in the region, make it likely that the rail line will stay out of Chinese hands for the foreseeable future.

Moreover, no action has been taken on the rumored construction of a Roll-On-Roll-Off (Ro-Ro) port at Corozal, which could support Chinese operations. Nor has action been taken regarding the development of 1,200 hectares of land north of Corozal, rumored to be of interest to Chinese investors who wanted to transform it into a logistics park to support the handling of Chinese products. Reportedly, the new leadership of the Panama Canal Administration, which owns the land, has emphasized water conservation projects—including a water management tender released in late 2020—rather than the development of new logistics facilities in the near term.

The water management tender itself, however, has drawn the interest of at least five Chinese firms. The water management system, to be awarded as a 50-year contract, would likely give the operator technical access to SCADA and other systems impacting water levels and other canal operations. Such access could, if used malevolently, impact not only Panama’s revenue stream from the canal, but also those of all international shipping companies, port operators and other logistics firms, freight forwarders, and product distribution companies touched by canal operations. The award of the system to a Chinese firm, although unlikely, would therefore grant the PRC an enormous new lever over global commerce.

Related to the water management issue, the Chinese reportedly offered to perform a study for the Varela government regarding the construction of a fourth set of locks for the canal (for which water is a critical issue). That offer was ultimately turned down, and there is no indication that the PRC made a similar offer to the Cortizo administration.

With respect to the Amador Cruise Terminal, contracted to the Chinese firm China Harbour, the contract awarded to China Harbour and the Belgian firm Jan De Nul was annulled due to a series of contract issues. The cruise ship pier itself was finished in February 2020. Work to complete the facility was suspended during the COVID-19 pandemic, but as of March 2021, the project was approximately 90 percent finished and was advancing with the completion of structures around the pier. The priority given to the project, nonetheless, remains a mystery, particularly at a time when many other public works in Panama remain suspended due to the pandemic. Notably, demand for cruise ships on the Pacific side of the canal has been almost nonexistent, and the cruise ship industry itself has been decimated by the pandemic.

A fourth bridge over the Panama Canal, intended to carry both highway and rail traffic, was initially awarded to a consortium of three Chinese firms: China Harbour, China Construction Americas, and China Landbridge. A legal challenge by the losing bidder caused the award to be delayed until November 2018. It was ultimately re-examined and scaled back, but finally began to move forward in September 2020, following delays caused by the pandemic, legal questions, and miscommunications. The significance of the project goes beyond the bridge itself. It also extends to massive amounts of construction work to redirect highways and create a complex system of overpasses, underpasses, and other infrastructure enabling access to the bridge.

Regarding the Canal Zone itself, in September 2019, the respected head of the Panama Canal Authority, Jorge Quijano, was replaced by Ricaute (“Catin”) Vásquez, an important figure in President Cortizo’s PRD. Vásquez is considered to bring more government experience to the table, in contrast to Quijano’s technical orientation, and some believe that he views the PRC skeptically. This skepticism of the PRC possibly comes from his previous work at General Electric, which is a competitor of Chinese companies. Vásquez’s more cautious approach to China is a contrast to that of the previously mentioned political Minister of the Canal Authority, Aristides Royo Sánchez, who assumed leadership in May 2019 and is a longstanding member of the Panama-China friendship society (APACHI)—an organization affiliated with the Chinese Communist Party United Front.

Under the Varela government, following China’s designation of Panama as a “Most Favored Nation” for access to Chinese ports, Panama contracted an unknown Chinese company, New United International Maritime Services, to certify vessels and their crews. Although the entity is not part of the International Association of Recognized Organizations, the issue remains unresolved under the Cortizo government.

China’s plan to build competing canal in Nicaragua:

Nicaragua’s Chinese-Financed Canal Project Still in Limbo

https://thediplomat.com/2019/08/nicaraguas-chinese-financed-canal-project-still-in-limbo/

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China’s plans are “complicated” and more political than economic as usual. Trump was in process of strengthening South American ties and at the same time weakening China’s favorabilty. America is still Panama’s Number one trading partner and China is number two, but remember Trump Executive Order relating to foreign election interference and asset forfeiture? When implemented I believe China’s economic positions around the world will be greatly weakened and reduced. So one sentence comments thrown out by other commenters are simplistic and weak given what is expected to happen due to Trump’s election E.O.