Following the capture of the Venezuelan president, strategic tensions between the United States and China, which has invested heavily in Latin America and the Caribbean in recent years, have returned to the forefront. Competition between the two powers could now fall on the Panama Canal. In the recent past, the Central American country has sought to keep a balance among rival interests. Washington could target other Chinese infrastructure projects and investments in raw materials.

Panama (AsiaNews) – Following the capture and abduction of Venezuelan President Nicolas Maduro, US President Donald Trump has indicated that the United States may now turn its attention to other strategic and resource-rich territories. This includes Panama, especially its canal zone, which, like Venezuela, has seen large-scale investments from China in recent years.

In his inaugural address last January, Trump said that influence over the Panama Canal was a matter of concern, when he declared that the United States would take it back.

In its latest National Security Strategy, released in early December, the current administration expressed the will to “restore American preeminence in the Western Hemisphere” and “deny non-Hemispheric competitors” any role, a barely concealed reference to China.

A few days later, the Chinese government released its own paper on Latin America and the Caribbean. Reaffirming its diplomatic ties with the region, it noted that “China has always stood in solidarity through thick and thin with the Global South, including Latin America and the Caribbean”.

This is a response to the military alliances that the United States has forged with Asian countries, something that China perceives as growing interference in its own “backyard”. For this reason, US actions in Venezuela are now of particular concern to some of Washington's key Asian allies, such as Japan and the Philippines.

At the same time, several Central American and Caribbean countries – like Guatemala, Haiti, Belize, and other smaller island nations – still maintain diplomatic relations with Taiwan, another issue on which China has focused its efforts, considering the island formerly known as Formosa a "rebel province" and a purely internal matter in which other countries should have no say.

According to some analysts, the competition between China and the United States in Latin America has only just begun. Since 2018, China signed partnership agreements as part of the Belt and Road Initiative with 24 South American countries and, in some cases, has replaced the United States as its main trading partner.

One of the most ambitious Chinese projects in the region is the port of Chancay, near Lima, 60 per cent owned by the Chinese state-owned company COSCO. Opened in November 2024, it has been hailed as China's “gateway" to South America.

It is, in fact, the first port capable of handling huge container ships. The goal is to ensure that South American products (especially soybeans, copper, oil, and lithium) are exchanged for Chinese goods, reducing dependence on North American ports and logistics costs by up to 20 per cent, saving 10 days of sailing.

As Leland Lazarus, a former US diplomat and now defence consultant, put it recently to the Wall Street Journal, Washington fears that some of these logistics hubs could become strategic support points for China’s armed forces.

According to some reports from the US Department of Defense, Cuba is one of the countries where China may have considered establishing a military base.

Other data show that between 2009 and 2019, China transferred military equipment worth a total of US$ 634 million to five Latin American countries, with Venezuela leading the list.

Between 2000 and 2018, China invested US$ 73 billion in raw materials, particularly in what has been dubbed the Lithium Triangle formed by Argentina, Bolivia, and Chile.

Panama, which in 2017 recognised the “one China" policy by severing ties with Taiwan, could become the next bone of contention between Beijing and Washington.

After Trump's statements at the start of his mandate, the Central American country withdrew from the Belt and Road Initiative. And, in an attempt to further defuse the canal dispute, Panamanian President José Raúl Mulino skipped the fourth Ministerial Meeting of the China–CELAC[*] Forum, in May, between South American leaders and Chinese President Xi Jinping.

On 28 December, authorities in the city of Arraiján removed a monument dedicated to the contribution of Chinese workers to the construction of the Panama Canal in the 19th century, an action that immediately drew the ire of Beijing.

“The monument stood as a witness and memorial to the time-honoured friendship between China and Panama, and to the tremendous contribution of Chinese workers who travelled across the oceans [. . .] some even paying the ultimate price during the construction,” said China’s Foreign Ministry spokesperson Lin Jian.

Panamanian President José Raúl Mulino slammed the removal. “There is no justification whatsoever for the barbarity committed by the mayor of Arraiján in demolishing the monument to the Chinese Community built on the Bridge of the Americas,” he wrote in a post on Facebook.

In his view, the country’s Chinese community “deserves all our respect. An investigation should be launched immediately. Such an irrational act is unforgivable."

Meanwhile, the Panamanian government is still considering a deal announced by BlackRock in March of this year. The consortium offered a US$ 22.8 billion deal to purchase 90 per cent of Panama Ports from CK Hutchison, a Hong Kong-based company that has controlled the ports of Balboa and Cristóbal since 1996, in order to bring the canal back under the control of owners aligned with the United States.

Brazil, on the other hand, signed 37 bilateral agreements with China as of May 2025, while the Transoceanic Railway, which would connect Brazil’s Atlantic coast to Peru’s Pacific coast, via the Amazon and the Andes, although announced in 2014, is still awaiting completion.

But China can afford to wait since its strategy has always been long-term.

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[*] Community of Latin American and Caribbean States.

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