The Chinese government has denounced a ruling by Panama’s top court to void CK Hutchison Holdings Ltd.’s contract to operate two ports as “extremely absurd,” warning the Central American country would pay a “heavy price” if it fails to change course.

The ruling disregarded facts and severely damaged the legitimate rights and interests of the enterprise in Hong Kong, the Beijing office overseeing affairs in the semi-autonomous Chinese territory said in a commentary posted on its WeChat account on February 3.

It accused Panama of succumbing to hegemony and yielding to intimidation, instead of defending its independence as a sovereign state.

“Panamanian authorities must recognize the situation and correct their course,” the Hong Kong and Macao Affairs Office said. “Persisting in this misguided path will result in a heavy price, both politically and economically.”

The two ports near the strategic Panama Canal have emerged as a geopolitical flashpoint between the U.S. and China. The commentary is the starkest rebuke yet by Beijing over the ruling last month, which marks a win for U.S. President Donald Trump’s effort to ensure U.S. dominance in Latin America and rein in China’s control of strategic infrastructure there. 

Without naming the U.S., the Beijing office slammed “certain countries” for using national security or geopolitics as pretexts to coerce others into submission. “This politicization of commercial issues incites conflict and decoupling, running counter to the global trends of peace and cooperation,” according to the commentary.

China’s Foreign Ministry and the Hong Kong government have both criticized the ruling, which was praised by U.S. Secretary of State Marco Rubio as an encouraging development.

Meanwhile, Panama’s President Jose Raul Mulino strongly rejected comments by the Hong Kong and Macao Affairs Office regarding the court ruling, saying judicial decisions are made independently of the central government and the country abides by rulings of its Supreme Court, according to a post on X.

The court’s decision risks fueling tensions between Washington and Beijing as the two sides seek to maintain a trade truce ahead of Trump’s scheduled visit to China in April. 

Trump has criticized what he perceives as Chinese influence over the canal and threatened to place it under American control, while Panama President Jose Raul Mulino has repeatedly asserted his nation’s full sovereignty over its operation. Hong Kong billionaire Li Ka-shing’s CK Hutchison began operating the facilities in 1997, with the contract later extended in 2021.

Rising tensions between Washington and Beijing over the Panama Canal could further complicate the ports sale by CK Hutchison. The transaction — announced in March last year — has become one of the tycoon’s most geopolitically fraught deals, despite the potential to generate more than $19 billion in cash if completed. 

The company said it has initiated arbitration proceedings against Panama. In a stock exchange filing on February 4, CK Hutchison warned shareholders and potential investors to “exercise caution” when dealing in its shares or other securities.