Description: US Secretary of State, Marco Rubio, has criticized China for economic bullying in the Panama canal after China detained for inspection more than 100 vessels under the Panamanian flag. Earlier this year, Panama’s constitutional court ruled against the Chinese CK Hutchinson, which held the ports in Balboa and Cristobal, and deemed their ownership unconstitutional, effectively banning the Chinese company from managing the ports. The Panama canal emerged as one of the flashpoints in the trade war between the US and China especially after the Trump administration refocused its priorities on reclaiming South America as part of the US sphere of global influence. China has denounced the accusations and reiterated that ultimately the US aims to control the entire trade flow passing through the canal.
Impact: Panama has become an utterly significant flashpoint in the latest escalation of the US – China trade war as the canal is vital to 5% of global maritime trade and is one of the top geostrategic priorities for both Beijing and Washington. The ruling by Panama’s constitutional court was largely perceived by China to have been coerced by the US since the largest maritime contractor, CK Hutchinson, was banned from managing crucial ports such as Balboa and Cristobal. China’s detention for inspecting the Panamanian flagged ships most likely arrives as a counterpunch for the alleged coerced ruling of the supreme court. China is most likely abusing the crisis in the Middle East to impose additional costs on the US national economy by blocking another key maritime trade and transportation route which further emphasizes the importance of global chokepoints such as the Panama canal for the world’s two largest economies and adversaries.