Clarifying the Confusion: Decoding China's Role in the Panama Canal Debate

In light of President Trump's assertions regarding China operating the Panama Canal, officials and analysts clarify misunderstandings, highlighting China's significant presence but affirming Panama's administrative control over the crucial waterway.

Amid rising geopolitical tensions, President Donald Trump reignited discussions concerning the Panama Canal in his inaugural address by asserting, "China is operating the Panama Canal," a statement that has generated controversy and confusion internationally. His claim, which he further elaborated on during a social media post on Christmas Day, was swiftly contested by both Panamanian and Chinese officials.

The Panama Canal is a vital maritime thoroughfare, approximately 51 miles (82 km) long, connecting the Atlantic and Pacific oceans. It plays a critical role in global trade, accommodating around 14,000 vessels annually. Trump's accusations paint a picture of Chinese military interference, a notion firmly rejected by Panamanian President José Raúl Mulino. He stressed there is no "Chinese interference" in the canal's administration.

Historically, the U.S. played a key role in the canal's construction, completing it in 1914 and maintaining control until a gradual handover agreed upon in a treaty signed in 1977. By 1999, the Panama Canal Authority assumed control, a transition supported by international agreements ensuring its permanent neutrality.

China's claim to the canal, according to Trump's rhetoric, may stem from the notable volume of trade passing through it. From October 2023 to September 2024, Chinese cargo constituted 21.4% of the total volume transiting the canal, making China the second-largest user after the U.S. However, the operation of surrounding ports—specifically Balboa and Cristóbal—by Hutchison Port Holdings, a Hong Kong firm, does not equate to governmental control by Beijing, despite fears in Washington regarding the implications of Chinese investments in the region.

China has strategically sought to amplify its influence in Panama, particularly after the nation established diplomatic relations with Beijing in 2017, severing ties with Taiwan. Following this, Panama became a participant in China's Belt and Road Initiative, marking a significant shift in regional alliances.

While Trump's assertions about China's involvement may resonate with certain political circles concerned about Beijing's activities, they starkly misinterpret the operational reality of the Panama Canal, which remains under the jurisdiction of the Panamanian government. As geopolitical dynamics continue to evolve, clarity around these assertions is essential for understanding the nature of international relations in a critical region.