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Investing.com -- China is threatening to block a multibillion-dollar port sale if COSCO (HK:1199), its state-owned shipping giant, is excluded from the deal, according to a report by The Wall Street Journal (WSJ).
The transaction would transfer ownership of more than 40 global seaports—including two at the Panama Canal—currently held by Hong Kong-based CK Hutchison, to Western buyers.
The deal, valued at nearly $23 billion, involves BlackRock (NYSE:BLK) and Mediterranean Shipping Co. (MSC), which reached a preliminary agreement in March to acquire the ports.
However, Chinese authorities are pressing for COSCO to be included as an equal shareholder alongside the two firms, WSJ reported, citing people familiar with the matter.
CK Hutchison Holdings (HK:0001), BlackRock, and MSC are now open to COSCO taking a stake, but no agreement can be made until the exclusivity period between the original parties expires on July 27, according to WSJ.
Any potential Chinese stake in the Panama ports could provoke a strong reaction from U.S. President Donald Trump, who has previously threatened to assert U.S. control over the canal and has voiced opposition to Chinese involvement there.
The Journal noted that Beijing was angered by Hutchison’s initial plan to sell the ports without Chinese participation. In response, Chinese regulators have instructed state-owned enterprises to suspend future transactions with Hutchison or companies tied to its parent firm, controlled by the family of Hong Kong billionaire Li Ka-shing.
The port deal has become entangled in broader U.S.-China tensions. During trade talks held in Switzerland in May, Chinese officials reportedly raised the issue directly with U.S. negotiators.
WSJ also said that Beijing warned Hutchison, BlackRock, and MSC it would move to block the sale if COSCO is excluded.