Why BlackRock boss Larry Fink believes he will win over control of the Panama Canal

Larry Fink is playing the long game.

With a little time, a possible nudge from President Trump and some on-the-ground lobbying of his contacts in mainland China, BlackRock’s billionaire boss believes he will win approval from the Mainland’s apparatchiks to take control of the Panama Canal, On The Money has learned.

Specifically, Fink is looking to close a $23 billion deal with Hong Kong-based CK Hutchison to buy 43 ports worldwide — including the two ports that are strategically located on the Atlantic and Pacific sides of the Panama Canal.

Until recently, most people didn’t know much about CK Hutchison, which is headed by the mercurial, 96-year-old billionaire Li Ka-shing, Hong Kong’s richest tycoon. That was until The Donald began talking up the strategic importance of the Panama Canal, one of the busiest waterways for global trade because it easily connects both oceans through a 51-mile deepwater runway. Hutchison holds long-term leases there and at dozens of others including on the Suez Canal. 

Its stock traded cheaply, and when Trump began to mouth off about the need to exert US eminence at the Panama Canal (the US, after all, built it and controlled the zone until the 1970s), Blackrock saw a way to make some money and get into Trump’s good graces.

The other side of the deal wasn’t so happy. And I’m not talking about Hutchison, but its overlords in the Chinese Communist Party who began to “investigate” the tie-up for God knows what other than to prevent the US from gaining a foothold at this vital waterway. The CCP is now threatening to throttle the entire deal.

The people at BlackRock are at least posturing in private conversations that they’re not too worried. They tell On The Money to ignore reports that the deal was set to be officially signed by Wednesday. The real due date is the 145-day “due diligence” period that began when the buyout was announced on March 4.

The grace period was designed to ensure a complicated buyout involving dozens of ports in many different countries comported with various laws, including getting buy-in from the Chinese President Xi Jinping.

Yes, the people at BlackRock said they saw the potential for trouble from China Inc., and they built that into the closing schedule. They believe that over this time, they can get the deal approved by the CCP overlords and put American flags back up in the canal zone.

“We are proceeding as if this deal will happen,” a BlackRock executive told On the Money as this column went to press.

Of course, things could change given the volatile nature of the relations between China and the US and the frenemy dynamic between Trump and Xi. Trump is said to admire the Chinese strongman (and the feeling seems to be mutual), but wary of his obvious global ambitions. Part of Trump, I am told, will never forgive the Chinese for unleashing COVID on the planet, which on top of all the misery it caused, doomed his re-election chances in 2020.

But the BlackRock deal is something Trump covets. He mentioned it in the State of the Union address, no less as proof of an American global renaissance. And people at BlackRock believe the deal will get folded into negotiations with the Chinese over Trump’s plan to save the China-owned short-video app TikTok from being banned from US app stores as early as this weekend, and our overall trade negotiations with the Mainland.

Barring some last-minute deal implosion (or a realistic new competing bid, which at this stage is unlikely), the White House is scrambling to unveil a plan for a newish US-investor-controlled TikTok any minute now, a structure, as On The Money reported, that the Trumpers believe will comport with a US law that demands the end of Chinese control.

But the Chinese will have some buy-in, as I also reported. That includes possibly a minority stake in the new company and it won’t have to part with its algorithm, the important part of TikTok that gins up user engagement and some say, has allowed the Chinese to spy on US users.

To get around the ban legislation, tech giant Oracle will be part of the planned new ownership group, but more importantly, monitor the algo in its cloud. To get Xi’s buy-in, the Chinese remain a part of the app’s infrastructure, which can operate in the US and retain its value estimated in the tens of billions of dollars.

Everybody is happy, the thinking goes, and Xi allows the Hutchison-BlackRock deal to proceed. Maybe it’s all wishful thinking on the part of BlackRock — which I might add is the first US based asset manager to open an office in the Mainland. That means Fink is well versed in Chinese politics and knows how to work the system. 

Or maybe the Chinese will kill the deal because they’re as leery about US global ambitions as we are of theirs. Either way, I’m here simply to report what’s happening, not what will happen, so stay tuned for more.

A BlackRock rep had no comment.