Recent developments have intensified tensions between Panama and China, primarily due to Panama’s decision to distance itself from China’s Belt and Road Initiative (BRI) under U.S. pressure. The move signals a significant shift in Panama’s foreign policy, aligning more closely with American interests and raising concerns about the broader geopolitical implications in the region.
Panama’s Withdrawal from the BRI
In early February 2025, Panama announced that it would not renew its participation in China’s BRI, making it the first Latin American country to exit the global infrastructure program. The decision followed discussions between Panamanian President José Raúl Mulino and U.S. Secretary of State Marco Rubio, during which the U.S. emphasized concerns over China’s growing influence in the region.
Rubio hailed Panama’s move as a significant step forward for U.S.-Panama relations, emphasizing its importance in maintaining a “free and independent” Panama Canal. The U.S. has long viewed China’s infrastructure investments in Latin America with suspicion, fearing they could lead to increased Chinese political leverage over strategic assets such as the canal.
U.S. Concerns Over the Panama Canal
The U.S. has expressed growing concerns over Chinese investments near the Panama Canal, particularly regarding Hong Kong-based CK Hutchison Holdings, which manages ports at both entrances of the canal. American officials worry that China’s economic foothold in Panama could translate into strategic control over the vital waterway, a key transit route for global trade.
Former U.S. President Donald Trump previously criticized the 1999 handover of the canal to Panama, calling it a “foolish gift” and suggesting that the U.S. should consider reclaiming control. However, the Panamanian government has firmly rejected such claims, asserting its sovereignty over the canal and its commitment to ensuring that it remains neutral and accessible to all nations.
Implications for Panama-China Relations
Panama’s decision to exit the BRI and reassess Chinese contracts marks a turning point in its foreign policy, shifting its alignment toward U.S. interests. While this move strengthens Panama’s ties with Washington, it risks straining economic relations with China, which has been one of the country’s top trading partners and infrastructure investors.
The long-term impact of this policy shift remains uncertain. Panama may benefit from closer ties with the U.S., potentially securing increased economic and military support. However, a breakdown in relations with China could pose challenges for the country’s economy, particularly in trade and investment sectors.
As geopolitical tensions between the U.S. and China continue to play out globally, Panama finds itself at the center of a strategic contest that could shape its economic and political future for years to come.
