Former US President Donald Trump has repeatedly claimed that China "operates" the Panama Canal and has even threatened to reclaim the crucial waterway to counter Beijing’s influence. However, an investigation by *BBC Verify* confirms that Panama itself operates the canal, while Chinese involvement is mostly tied to infrastructure projects surrounding it.

Despite Trump's assertions, the United States remains the primary user of the canal, handling over three times the cargo volume of China. However, China’s investments in Panama have surged, particularly after the country joined Beijing’s Belt and Road Initiative (BRI) in 2017. This partnership led to increased Chinese participation in construction projects around the canal, although Panama exited the BRI earlier this month amid pressure from Washington.

While Panama controls the canal, concerns about Chinese influence stem from its control over two major ports at either end of the waterway—Cristóbal and Balboa. These have been operated by a subsidiary of Hong Kong-based CK Hutchison Holdings since 1997. Experts warn that in a crisis or conflict, China could potentially exert influence over these ports due to Hong Kong’s national security law. Henry Ziemer, an analyst at the Center for Strategic and International Studies (CSIS), noted that in a crisis, the Chinese Communist Party (CCP) could use these ports to restrict US naval and commercial access. This concern was echoed by General Laura J. Richardson, former commander of the US Southern Command, who testified that China could leverage strategic regional ports in times of global conflict.

Chinese companies have also been involved in key infrastructure projects near the canal. One of the most significant is the Fourth Bridge over the Panama Canal, a $1.42 billion project that has faced delays but has shown construction progress in recent satellite images. Other projects include the Amador Cruise Terminal, built by China Harbour Engineering Company, and an extension of the Panama City Metro, being constructed by China Railway Tunnel Group Company, which runs under the southern end of the canal. US lawmakers, including Republican Senator Ted Cruz, have raised concerns that China could potentially use these projects to obstruct the canal, though specific threats remain unclear.

Despite initial enthusiasm for Chinese investment, Panama has reversed several major China-backed projects in recent years. Panamanian economist Eddie Tapiero estimates that around 50% of projects initiated under the BRI have been discontinued or suspended. Among the scrapped projects are a proposed high-speed rail line from Panama City to David, a new port on Isla Margarita that was intended to enhance China's trade presence in the Caribbean, and a Chinese embassy on the Amador Causeway Islands, which was canceled in 2018. Analysts believe that Panama has become wary of China’s infrastructure deals and, under pressure from Washington, is shifting away from Beijing’s influence.

While China invested $1.4 billion in Panama in 2023—four times the amount since joining the BRI—the United States remains the biggest investor and the dominant trade partner. From October 2023 to September 2024, US-bound cargo through the canal far outpaced that of China. Experts suggest that Panama's recent actions indicate a strategic move to rebalance its relationships, ensuring that US interests remain central while limiting Beijing’s influence.

With up to 14,000 ships navigating the 51-mile (82km) canal each year, the waterway remains a crucial passage for global trade, cutting weeks off shipping routes between China and the US East Coast, as well as between San Francisco and New York. As tensions between Washington and Beijing continue, the Panama Canal remains at the heart of geopolitical rivalry, with both superpowers vying for influence over this vital maritime route.