A media mouthpiece of the Chinese Communist Party has suggested using China’s anti-sanctions mechanism to deal with Hong Kong tycoon Li Ka-shing’s proposed selling of his global ports, including two at the Panama Canal, to BlackRock.
In its latest article titled “Stop the transaction, avoid losing a lot to save a little,” Ta Kung Pao, a pro-Beijing newspaper, urges Li to scrap his ports deal.
Since its first attack on Li on March 13, the newspaper has published more than 10 commentaries and news articles on the topic. While previous ones called Li a “traitor” and an unpatriotic businessman, its latest opinion piece mentions a concrete legal tool – the anti-sanctions law – for the first time.
“Both at the national and Hong Kong Special Administrative Region levels, our legal system is quite complete,” writes Wan Yunping. (The name may be a pseudonym as the author has no title and has not published any article before.)
“In response to the United States and Western sanctions in recent years, our country has accumulated rich experience in anti-sanctions and formed an effective response mechanism,” Wan says. “Both the state and the SAR have legal mechanisms to deal with so-called ‘legal transactions’ that harm national interests.”
He says those who have stressed that Li’s proposed deal is a “legitimate transaction” under the principle of freedom of contract are “too naive and senile.”
“From the operational level of commercial mergers and acquisitions, I advise relevant companies and individuals to stop delivery, avoid miscalculations and avoid losing a lot to save a little,” Wan says.
The author also says Li’s deal violates the principle of Hong Kong’s National Security Ordinance, which states that “the highest principle of the policy of ‘one country, two systems’ is to safeguard national sovereignty, security and development interests.” The Legislative Council passed the ordinance, drafted on the basis of Article 23 of the Basic Law, in March 2024.
“This transaction directly violates this highest principle as it will hurt China’s national security and development interests,” he says. “Violating the principle of the law is also a violation of the law.”
“Throughout the legal system, not every legal provision directly states the consequences of violation,” he adds. “However, the lack of written legal consequences does not mean the law has no legal effect.”
In August 2021, Beijing suggested extending the coverage of its Anti-Foreign Sanctions Law to Hong Kong by adding it to Annex III of the Basic Law. If implemented, this law would forbid Hong Kong companies and banks from enforcing foreign sanctions against China.
However, the National People’s Congress (NPC) standing committee finally did not discuss the suggestion after considering that it would put Hong Kong’s banks and financial institutions in a difficult position in the fight between China and the US and trigger capital flight from Hong Kong.
Some observers have said that Beijing can use the existing National Security Law and the potential implementation of the anti-sanctions law in Hong Kong to deal with Li. But Ronny Tong, a legal expert and an Executive Council member, said it’s unlikely that Beijing will intervene in the case with the National Security Law.
“The United Kingdom passed the National Security Investment Act in 2021 to scrutinize outbound and inbound investment, while the United States has also recently banned American companies from investing in China and Chinese companies from investing in the US,” Tong says in a social media post.
“The media and international community did not criticize these restrictions. But if the SAR government intervenes in a case for national security reasons, it will definitely attract overwhelming criticism and smear,” he says. “We have always dealt with things fairly and in accordance with the law. It is the difference between China and the UK-US.”
He says Li must consider whether selling his ports is in the national interest.
It is unclear whether Beijing will block Li’s ports deal with the anti-sanctions law. For that to happen, the NPC Standing Committee needs to hold a meeting before CK Hutchison and the BlackRock-Til consortium sign definitive documentation for the transaction on April 2.
Victor Li’s statement
On March 4, CK Hutchison, Li’s flagship company, announced that it had agreed to sell its entire 80% stake in Hutchison Ports – which owns, operates and develops 43 ports comprising 199 berths in 23 countries – to BlackRock for US$22.8 billion.
After this, Victor Li, the elder son of Li Ka-shing and chairman of CK Hutchison, reportedly met with a “national leader” to discuss the deal in Beijing, but he insisted on continuing the transaction.
Bloomberg reported on March 18 that senior Chinese leaders ordered several government agencies, including the State Administration for Market Regulation, to scrutinize the deal for any potential security breaches or antitrust violations. Still, the probe would not necessarily result in any follow-up action.
“Looking ahead to 2025, there may be headwinds with supply chain disruptions anticipated in the early part of the year due to shipping lines transitioning into their new alliances, as well as ongoing geopolitical risk impacting global trade,” Victor Li says in CK Hutchison’s 2024 result announcement released on March 20.
He says that the company’s port business will continue to improve this year with moderate organic growth in Asia and the Middle East, expansion at existing terminal facilities and strengthening strategic partnerships.
Revenue from the company’s ports and related services grew 11% to HK$45.3 billion (US$5.83 billion) for the year ended December 31, 2024. The segment’s earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 19% to HK$16.2 billion.
Pundits’ debate
In China most commentators criticized the 96-year-old Li Ka-shing for selling his global ports to BlackRock, although a few defended him.
A Fujian-based writer using the pseudonym “Xinghua Dabai” says in an article published on Wednesday that Li failed to sell 40% of Hutchison Ports to Chinese state-owned enterprises (SOEs) for about HK$150 billion in 2015 because the premium was too high.
“Many people asked why China did not buy Li’s ports in the past. It’s not that we did not want to buy,” the writer says. “A 2015 news article showed that Chinese buyers felt Li’s asking price was too high. Besides, they did not want to only hold a minority stake.”
The writer says Li’s asking price in 2015 was about 26 to 28 times the assets’ EBITDA, more than double the industry’s 10 to 12 times valuation then. He says now Li offers BlackRock 80% of his port assets for 11 to 13 times EBITDA, compared with the industry’s 9 to 10 times valuation.
He says Li deserves criticism this time because he is selling his ports to BlackRock at a lower valuation.
“Someone might also ask why China does not buy the ports now,” he says. “Such a deal will involve antitrust probes in 12 jurisdictions, including the European Union, the US and Brazil. Obviously, the US won’t approve it if our SOEs buy Hutchison Ports.”
In an interview, Larry Lang, a Hong Kong-based Taiwanese economist, says Li should not face criticism for selling his own assets, especially when port operation is a declining sector.
Lang says Li won Britain’s trust to acquire Hutchison Whampoa in 1979 and spent decades expanding it; besides, Li is a Canadian citizen and should not be judged on his Chinese patriotism.
Lang says that, as China has already started building ports and railways overseas in the past decade, the negative impact of Li’s deal on the country will only be temporary.
Yong Jian is a contributor to the Asia Times. He is a Chinese journalist who specializes in Chinese technology, economy and politics.
Read: China probes Li Ka-shing’s Panama ports deal for security concerns
Read: Beijing calls Li Ka-shing a ‘traitor’ in Panama ports deal