US Secretary of State Marco Rubio said last week it was “unacceptable” for Hong Kong-based companies to control the canal’s entry and exit points, arguing they could shut down transit if Beijing ordered them to.

Panama has now announced an audit into the subsidiary of Li’s CK Hutchison Holdings, which manages two of the canal’s five ports.

Here’s what you need to know about the Panama port operator and its ties to China:

Who runs the ports?

Hutchison Ports PPC — which also uses the name Panama Ports Company SA — has managed the port of Cristobal on the canal’s Atlantic side and Balboa on the Pacific side since 1997 via a concession from the Panama government.

That arrangement was automatically renewed in 2021.

Hutchison Ports said last month that it is the “only port operator in the country where the state is a shareholder”, and that it had paid the Panama government $59 million in the past three years.

It said its workforce is almost entirely Panamanian.

Parent company CK Hutchison Holdings is one of Hong Kong’s largest conglomerates, spanning finance, retail, infrastructure, telecoms and logistics.

The company has a hand in running 53 ports in 24 nations, including in Britain, Spain and Australia.

Hong Kong’s ‘Superman’

CK Hutchison was built from nothing by Li — now Hong Kong’s richest man, nicknamed “Superman” for his business acumen.

His company Cheung Kong — named after China’s Yangtze River — thrived in Hong Kong’s property market during the British colonial era and began expanding overseas in the 1980s.

In 2015, CK Hutchison was born out of a restructuring.

Three years later, Li stepped down as company chairman at age 89 and handed control to his eldest son Victor.

The firm and its subsidiaries operate a range of businesses, including ports, in mainland China.

Li was known to have close ties with top Chinese leaders before Xi Jinping came to power.

Victor Li is a long-time member of the Chinese People’s Political Consultative Conference, a top political advisory body.

Exposure to China

Rubio says the current arrangement is not in the national interests of the United States.

If Beijing ordered a shutdown of the canal, a Hong Kong firm would have no choice but to comply as “a company based in Hong Kong is the government of China”, Rubio said last week, without specifying CK Hutchison by name.

A former British colony, Hong Kong was handed over to China in 1997 under a “One Country, Two Systems” framework which promised a high degree of autonomy and a separate legal and financial system.

But Beijing has remoulded Hong Kong in its authoritarian image after the city saw huge and sometimes violent pro-democracy protests in 2019.

Critics say the city’s two subsequently imposed national security laws curtail rights and undermine the free and open business environment that made Hong Kong an international finance hub.

In 2020, Israel rejected an infrastructure bid from CK Hutchison after then US secretary of state Mike Pompeo warned about Chinese involvement.

‘Never interfered’

A Hong Kong government spokesperson told AFP that the city’s authorities have “never interfered in the commercial operation of Hong Kong companies”.

The financial hub has been a “staunch supporter of the multilateral trading system and opposes any country imposing measures or restrictions that undermine normal trade or business operations”, the spokesperson said.

CK Hutchison did not respond to questions about canal operations. Last month the company directed AFP to a statement by its Panama subsidiary.