Papers please: China raises pressure on Panama amid canal row with ship inspection wave | South China Morning Post

Beijing has increased its inspections on Panama-flagged vessels entering Chinese ports, a source from the shipping industry said, an action intended to raise the Latin American country’s stress level after its courts voided the operating rights of Hong Kong-based conglomerate CK Hutchison in the Panama Canal.

Port state control (PSC) – the inspection regime countries may deploy to verify the compliance of foreign ships with various international standards – was being used as a form of leverage as tensions continue to roil over the vital shipping lane, the source told the South China Morning Post.

“The intensification of inspections on Panama-flagged vessels is a move to ramp up pressure on the country amid the ongoing port dispute.”

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China’s Ministry of Foreign Affairs had pledged to resolutely safeguard the legitimate rights and interests of its enterprises after Panama’s top court annulled the port concession granted to a subsidiary of CK Hutchison in late January.

The concession, deemed “unconstitutional” by the Panamanian court, had been in place in various forms since the 1990s; the judicial decision was made after US President Donald Trump threatened to “take back” the canal and levied repeated allegations of Chinese influence on global shipping throughout the first year of his second term.

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In February, Panamanian authorities handed temporary, separate control of the two ports to units of the Danish shipping giant Maersk and the Geneva-based MSC.

Beijing’s increased rate of inspection could have a significant ripple effect on the industry. For its ease of adoption and utility in avoiding other countries’ strict maritime regulations, Panama is among the world’s most common ship registries – trailing only Liberia – and vessel registration is a significant component of the country’s economy.