The Panama Canal, a linchpin of global commerce and a historic symbol of U.S. engineering might, has once again landed at the epicenter of a high-stakes geopolitical contest. As of August 2025, the waterway is the focus of a fierce tug-of-war between the United States and China—a contest that’s playing out not just in boardrooms and government halls, but in the very neighborhoods and monuments of Panama itself.
President Donald Trump, in his January 2025 inaugural address, left no doubt about his administration’s intentions: “We didn’t give it to China,” he declared, referring to the canal. “We gave it to Panama, and we’re taking it back.” According to The Guardian, this vow set off months of tense negotiations and mounting pressure on both Panamanian and Chinese officials. Trump’s rhetoric, at times suggesting a willingness to use force, has stirred memories in Panama of the 1989 U.S. invasion—a reminder of the region’s fraught history with American intervention.
By April, the landscape shifted dramatically. CK Hutchison, a Hong Kong-based conglomerate running two of the canal’s largest port terminals and known for its ties to the Chinese Communist Party (CCP), announced plans to divest its global port holdings. This included the strategically vital sites in Panama, a move that stunned CCP leadership and, as reported by The Guardian, triggered a furious response from Beijing. The Chinese government launched investigations into the deal under anti-monopoly and corruption pretexts, leveraging legal threats against Panama in a desperate bid to block the sale.
But the dominoes kept falling. Panama officially withdrew from China’s Belt and Road Initiative (BRI)—the signature infrastructure scheme championed by President Xi Jinping—before the end of July. The country’s comptroller general then refused to register an extension of the port concession agreement on July 29, effectively denying Beijing’s request for more time and putting the existing deal on life support. According to The Washington Post, Panama’s move to audit the Hong Kong-based company and initiate legal action to nullify its contracts marked a decisive pivot away from Chinese influence.
“Talk about a malign influence, not just from a security perspective, from an economic perspective as well,” said Kevin Marino Cabrera, the U.S. ambassador to Panama, in an interview with The Washington Post. “That’s money that belongs to the people of Panama.”
Panamanian President José Raúl Mulino, pressed on the broader implications of these moves, was unequivocal: “We have a relationship with China,” he said in August, “but our top … commercial, security, tourism and national partner is and will be the United States of America.”
For many Chinese Panamanians, these geopolitical shifts have had a tangible, sometimes painful, impact. The Mirador de las Américas overlook in Arraiján—a monument built to mark the 150th anniversary of the Chinese community in Panama—now sits crumbling behind orange tape. Once a proud symbol of the community’s contributions, it has become, as Carlos Ng of the Chinese Association of Panama put it, “a potent symbol of Panama’s tilt toward Washington.” The local government’s refusal to allow Chinese leaders to renovate the site, or even respond to their messages, is seen by some as emblematic of a broader freeze in relations.
“What’s happening with the overlook is what’s happening in Panama at a global level,” said Juan Tam, a former canal employee whose parents emigrated from China in the early 20th century. The monument’s uncertain fate mirrors the larger story of Panama’s Chinese community, which has grown to represent between 5 and 10 percent of the nation’s population. From the first railroad laborers in the 1850s to the bustling Chinatowns and dim sum breakfasts of modern Panama City, the community’s roots run deep. Yet, as historian Berta Alicia Chen notes, the community now finds itself caught in the crossfire of superpower rivalry.
Panama’s recent steps away from China have been swift and sweeping. In addition to withdrawing from the BRI and targeting CK Hutchison’s port contracts, Panamanian authorities have removed Huawei telecommunications towers—long a point of U.S. concern—and replaced them with $8 million in “secure American technology,” according to a June announcement from the U.S. Embassy. In April, U.S. Defense Secretary Pete Hegseth signed a deal allowing American forces to return to three training facilities near the canal, a move he said would prevent Panama from “capitulating to coercion” by China.
For its part, the canal’s management insists on neutrality. “Everyone gets treated the same. It’s neutral—that’s how we’ve managed the canal since 1914,” said Jaime Troyano, a historian for the Panama Canal Authority. He dismissed claims that U.S. ships or firms are charged higher fees, pointing to the 1977 treaties that established equal tolls for all nations. “The only people who pass here for free are the crocodiles,” he quipped.
Yet, China’s ambitions in Panama have deep roots. As Professor Pei Xiaohong, a former adviser to the Chinese Politburo who defected in 1990, explained to The Guardian, “After Lenin, Mao regarded trade as a battlefield. He believed the party should deceive the enemy while advocating win-win cooperation and competing fiercely.” The CCP’s campaign to secure Panama’s ports dates back to the late 1990s, when a Chinese subsidiary masqueraded as a British firm to win port management rights. COSCO Shipping, another state-owned Chinese giant, has operated in Panama since 1995, collecting over $200 million in annual tolls and dramatically expanding its shipping capacity between Panama and the United States.
Military defectors have confirmed that China views the canal as a strategic asset in any potential conflict with the U.S., with reports of military equipment concealed in shipping containers and vessels disguised as civilian craft. “For their success, they need to be positioned close to the battlefield in advance,” warned a former senior officer in China’s military. The Australian Lowy Institute recently cautioned that China’s use of commercial ports to project military power “could threaten vital sea lanes [and] constrain U.S. and allied military maneuverability.”
China’s setbacks in Panama may soon be echoed elsewhere. In Australia, for instance, the Chinese firm controlling the Port of Darwin defaulted on a $107 million bond in 2024, opening the door for Australia to reclaim the port—a move that could inspire other nations to follow suit. As Peter Jennings, a former Australian Defense Department official, put it, the loss would “reflect badly on President Xi Jinping’s signature Belt and Road Initiative.”
Back in Panama, the debate over the Mirador de las Américas monument continues. Xu Xueyuan, China’s ambassador, called it “a tribute to the Chinese contributions to the country” and insisted “no effort to demolish it or move it must be allowed.” But for many Chinese Panamanians, the monument’s fate is less about geopolitics and more about respect for their heritage. “What we don’t have to mix is culture and politics,” said Carlos Ng. Patsy Lee, a Chinese Panamanian delegate to the National Assembly, echoed the sentiment: Panama, she argued, should nurture ties with both the U.S. and China, rather than forcing its Chinese community into the middle.
As the U.S. and China continue their tug-of-war over the Panama Canal, the consequences ripple far beyond shipping lanes and balance sheets. In the streets of Arraiján and the halls of government in Panama City, the struggle for influence is shaping not just the future of global trade, but the everyday lives and identities of Panamanians themselves.