China has rejected allegations that it is deliberately subjecting Panama-flagged vessels to heightened inspections at its ports, insisting the measures are routine maritime safety checks prompted by a series of accidents involving Panama-registered ships.
The dispute comes amid escalating tensions following Panama’s Supreme Court decision to declare the long-standing port concession contracts of Hong Kong-based CK Hutchison at the Panama Canal unconstitutional. The ruling has sparked legal battles, diplomatic friction, and heightened scrutiny across the global shipping industry.
Speaking at the Dialogue with Permanent Observers of the Organization of American States (OAS) in Panama, Chinese Ambassador Xie Feng dismissed claims that the increased inspections were retaliation against Panama’s decision to revoke CK Hutchison’s concessions. He said China’s Port State Control inspections are conducted in accordance with domestic laws and international maritime conventions and are not targeted at vessels from any specific flag state.
According to Xie, Panama-flagged ships have been involved in multiple collisions with merchant and fishing vessels in Chinese waters since the beginning of 2026, resulting in fatalities and missing persons. He said the enhanced inspections were introduced solely to improve maritime safety and protect seafarers.
Concerns over increased inspections first emerged in March, shortly after Panama’s court ruling. Data reviewed by Lloyd’s List Intelligence showed inspections of Panama-flagged vessels at Chinese ports doubled in March compared with historical averages and nearly doubled again in April. Detentions during the two months exceeded the total recorded throughout 2025, while Panama’s ship registry has also seen a noticeable increase in vessel departures.
Panama’s Foreign Minister Javier Martinez-Acha has urged China to respect national sovereignty, expressing concern over the sharp rise in inspections and vessel detentions. The issue has also drawn criticism from the United States, where Federal Maritime Commission Chair Laura DiBella suggested the inspections appeared to be politically motivated and carried out under informal directives.
China has strongly denied those accusations, maintaining that the inspections comply fully with international maritime regulations. Ambassador Xie also defended CK Hutchison’s nearly three decades of operations, arguing that the company had contributed significantly to Panama’s economic development since obtaining the concessions in 1997.
Following the court’s ruling, interim management of the two strategic canal ports was transferred to A.P. Moller-Maersk and Mediterranean Shipping Co., while CK Hutchison has initiated international arbitration seeking compensation. Panama plans to launch a fresh tender later this year, with separate operators expected to be appointed for each facility.
The dispute has also affected broader commercial relations. Reports indicate that Chinese state-owned shipping giant COSCO suspended container shipments to Balboa Port earlier this year, while unofficial claims suggest Chinese companies were advised to limit business with Panama.
The Panama Canal remains one of the world’s most critical maritime trade routes, handling approximately 5% of global seaborne trade and around 40% of U.S. container traffic. Industry observers believe the dispute reflects the intensifying strategic competition between China and the United States for influence in Latin America, with legal proceedings and geopolitical tensions expected to continue alongside Panama’s upcoming port tender process.
