China's Involvement with the Panama Canal: Truth or Misunderstanding?

A discussion on the actual operation of the canal, historical context, and the geopolitical implications of China's investments in the region.

The Panama Canal has become a focal point of debate after former President Donald Trump claimed during his inaugural address that China is "operating" this vital transoceanic passage. Trump’s assertion, claiming the canal is effectively under Chinese control, has raised eyebrows, especially following past comments he made calling for the canal's return to U.S. governance. However, facts paint a different picture.

The 51-mile (82 km) canal, a crucial maritime route linking the Atlantic and Pacific Oceans, plays a massive role in global trade, facilitating transit for approximately 14,000 ships annually. Despite Trump's claims, the Panama Canal is under the jurisdiction of the Panama Canal Authority, an entity responsible for its operation and management since the U.S. relinquished control in 1999.

Previously, Trump had mentioned the canal in online posts, alleging that Chinese military presence was unlawfully managing the waterway, an assertion that drew swift denial from officials in both Panama and Beijing. Panamanian President José Raúl Mulino has consistently refuted Trump's statements, emphasizing that there is no foreign interference in the canal's administration.

Historically, the U.S. took charge of the canal's construction in the early 20th century, following a failed French endeavor, culminating in its opening in 1914. American control lasted until the late 20th century when treaties permitted Panama to take full control by 2000. Although the U.S. retains the right to intervene militarily to protect the canal's neutrality, it does not imply ownership or operational control.

Despite this clarity, Trump's comments reflect deeper apprehensions among U.S. officials regarding China's burgeoning influence through investments in nearby infrastructure. While there's no evidence that China controls the canal, the nation is the second-largest user, making up 21.4% of the canal's cargo volume as of 2024. Additionally, two key ports adjacent to the canal are run by Hutchison Port Holdings, a Hong Kong-based corporation connected to significant Chinese interests.

Concerns persist in Washington over potential strategic advantages Beijing could glean from its investments, especially amidst rising tensions between the U.S. and China. Ryan Berg of the Center for Strategic and International Studies warns that cargo data accessed through these ports could become critical in a future supply chain conflict, revealing the stakes of Chinese involvement even if limited to commercial interests.

China’s strategy in Panama reflects broader regional ambitions, especially after Panama shifted diplomatic relations from Taiwan to China in 2017 and joined the Belt and Road Initiative shortly thereafter. Through various investments and soft power outreach, including cultural institutes and media training programs, China’s influence in Panama signals its intent to expand its foothold in an area historically aligned with U.S. interests.

In conclusion, while Trump's claims about China "operating" the Panama Canal resonate with some geopolitical fears, the reality is that Panama maintains operational authority over the canal. The complex interplay of diplomatic relations, trade, and investment continues to shape the narrative as both China and the U.S. vie for long-term influence in Central America.