The Panama Canal, a pivotal maritime route, is operated directly by Panama. However, geopolitical interests swirl around this critical asset, with the United States maintaining its position as the largest investor in Panama and the primary user of the canal. Meanwhile, China's influence in the region, once burgeoning, may be waning. This development follows Panama's enrollment in the Belt and Road Initiative (BRI) in 2017, a global infrastructure project spearheaded by Beijing. Chinese companies became increasingly active around the canal post-BRI, sparking international interest and concern.
Despite the increased Chinese activity, Henry Ziemer of the Center for Strategic and International Studies (CSIS) suggests that China's influence in Panama could be diminishing. The BRI initially saw Chinese investments surge, with $1.4 billion invested in Panama in 2023 alone—a fourfold increase since 2017. This influx stands in contrast to declining U.S. investments over the same period. Yet, the United States continues to dominate canal usage and investment, underpinning its strategic interests in the region.
The geographical importance of the Panama Canal is undeniable. It significantly reduces transit time for goods between key global ports, such as from Shenzhen in China to the U.S. east coast, or between San Francisco and New York. The canal is flanked by five major container ports: Colon, Manzanillo, and Cristóbal on the Atlantic side, and Rodman and Balboa on the Pacific. Notably, three of these—Colon, Rodman, and Manzanillo—are operated by companies from Singapore, Taiwan, and the United States.
In recent years, Chinese firms have played a prominent role in infrastructure projects around the canal. A notable endeavor is the construction of the Fourth Bridge by a Chinese corporation, which will link Panama City to West Panama. This undertaking has raised concerns among some U.S. officials regarding potential strategic implications. Republican Senator Ted Cruz highlighted risks associated with such projects, suggesting that the "partially-completed bridge gives China the ability to block the canal without warning."
The potential strategic leverage of Chinese-operated ports is also a point of contention. General Laura J Richardson remarked on China's capacity to use regional ports to limit U.S. naval and commercial access during conflicts. Henry Ziemer echoed similar sentiments, noting that "in a time of a crisis or a conflict it would be relatively trivial for the Chinese Communist Party (CCP) to say we’re going to use the ports." Despite these concerns, Ziemer remains skeptical about direct control from Beijing over entities like CK Hutchison on a day-to-day basis.
Panama's connectivity ambitions extend beyond maritime routes. The China Railway Tunnel Group Company is constructing an extension to the Panama City Metro that will run under the canal's southern end. However, not all Chinese-backed projects have come to fruition. A proposed high-speed rail line from Panama City to David was shelved following a governmental change in Panama.
While China's growing investments around the canal have sparked international debate, it is essential to underscore Panama's sovereignty over this vital waterway. Despite foreign investments and influences, Panama remains at the helm of canal operations. The U.S.'s predominant role as both an investor and user underscores its enduring strategic interest.