The Billionaire Caught Between Trump and China

Summary

Podcast Summary: The Billionaire Caught Between Trump and China

Podcast Information:

• Title: The Journal
• Host/Author: The Wall Street Journal & Gimlet
• Description: The most important stories about money, business, and power. Hosted by Kate Linebaugh and Ryan Knutson, with Jessica Mendoza. The Journal is a co-production of Spotify and The Wall Street Journal.
• Episode: The Billionaire Caught Between Trump and China
• Release Date: April 15, 2025

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Introduction

In the April 15, 2025 episode of The Journal, guest host Allison Poli delves into the intricate web surrounding Hong Kong's richest man, billionaire entrepreneur Li Ka Shing. The episode, titled "The Billionaire Caught Between Trump and China," explores how Li Ka Shing finds himself in the midst of geopolitical tensions between former U.S. President Donald Trump and Chinese President Xi Jinping, particularly focusing on a controversial deal involving the Panama Canal ports.

Li Ka Shing: The Investment Icon

[00:00 – 01:13]

The episode opens with Jess introducing Li Ka Shing, highlighting his status as Hong Kong's richest man with a net worth of $36 billion. Rebecca Fung describes him as "the Warren Buffet of Asia," noting his significant influence in economic matters across Hong Kong and mainland China.

Rebecca Fung [00:45]: "Actually, in Hong Kong, people kind of gave him the nickname of Superman just because he's just so good at doing deals over the years and always at perfect timing."

Li Ka Shing is portrayed as a revered businessman whose insights are highly sought after by reporters and analysts alike.

Rise to Prominence

[04:04 – 05:42]

The narrative traces Li's humble beginnings in the 1950s manufacturing decorative plastic flowers. He transitioned into real estate in the 1960s, capitalizing on low-priced land in Hong Kong. His pivotal moment came in 1979 when he took over Hutchison Whampoa, marking the first time a local Hong Kong entrepreneur led a major business previously dominated by British nationals.

Rebecca Fung [04:23]: "His rise to fame was in 1979 when he took over this massive trading group called Hutchison 1POA."

Under British rule, Hong Kong's free-market economy facilitated Li's growth, eventually transforming CK Hutchison into a global conglomerate with diverse interests spanning real estate, drugstores, telecom, and numerous international trading ports.

The Controversial Panama Canal Deal

[05:42 – 07:52]

Li Ka Shing's extensive port holdings became central to a major deal in early March, where CK Hutchison entered into an agreement with a consortium led by BlackRock, an American asset manager, to sell majority stakes in the Panama Canal ports and other global ports for nearly $23 billion.

Jess [07:11]: "It would be the biggest deal of Li Cushing's career, worth nearly $23 billion."

This move was initially viewed as strategic, positioning Li to mitigate risks amid rising global tensions and potential tariffs.

Donald Trump's Intervention

[07:52 – 08:56]

U.S. President Donald Trump took a strong interest in the Panama Canal's security, expressing concerns over Chinese influence. Trump misrepresented the situation by associating CK Hutchison with China, stating:

Donald Trump [06:07]: "And above all, China is operating the Panama Canal. And we didn't give it to China, we gave it to Panama."

This mischaracterization amplified tensions, framing the deal as a geopolitical issue rather than a purely business transaction.

Xi Jinping and Beijing’s Reaction

[08:56 – 12:53]

Chinese President Xi Jinping reacted vehemently to the deal, viewing it as a loss of leverage in U.S.-China relations. Despite Xi's dissatisfaction, he was cautious not to overtly block the deal to maintain China's image as a welcoming destination for foreign investment.

Rebecca Fung [09:14]: "Xi was infuriated by it, and that's according to people familiar with the matter, because they were caught off guard that they suddenly lost this very important bargaining chip."

Beijing employed subtle tactics to pressure the deal's finalization, including aggressive media criticism of Li Ka Shing and directing state-owned enterprises to halt new business collaborations with CK Hutchison. Additionally, an antitrust review was initiated to create bureaucratic delays.

Deal Under Duress: Current Challenges

[12:53 – 15:39]

The deal faces significant obstacles, notably from Panama's top auditor accusing CK Hutchison of owing $300 million in dues, a move perceived as politically motivated amid China's influence in Panama.

Donald Trump [13:57]: "Panama's top auditor is accusing the company."

This accusation has introduced a critical hurdle, potentially extending the deal's completion timeline by six months to a year. Li Ka Shing and his son, Victor, now chairing Hutchison, must weigh the benefits against the escalating geopolitical pressures.

Rebecca Fung [15:17]: "It's not nothing. Yeah. So I think right now the decision kind of rests within Li Keqing and his son and, you know, his close advisors to basically weigh going through with the deal."

Implications for Li Ka Shing’s Legacy and Hong Kong Tycoons

[15:39 – 17:17]

The episode reflects on the broader implications of this conflict for Li Ka Shing's legacy and the business climate in Hong Kong. Li's predicament underscores the intertwining of business with political allegiances, signaling to other Hong Kong tycoons that commercial decisions now carry significant geopolitical risks.

Rebecca Fung [16:12]: "It sends a very chilling signal to other Hong Kong tycoons and their kids, second generation basically. And these tycoons will be watching very closely because many of these tycoons are the people and the families who made Hong Kong, Hong Kong over the years."

The situation presents a cautionary tale about the complexities of conducting international business amidst intensifying U.S.-China tensions, highlighting the need for strategic navigation in an increasingly polarized global landscape.

Conclusion

[17:37 – End]

In conclusion, Li Ka Shing's ambitious Panama Canal port deal exemplifies the precarious balance between business acumen and geopolitical maneuvering. As pressures mount from both Donald Trump and Xi Jinping, the outcome of this deal could have far-reaching consequences for international business practices and the autonomy of global entrepreneurs navigating the intertwined realms of commerce and politics.

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Notable Quotes:

• Rebecca Fung [00:45]: "In Hong Kong, people kind of gave him the nickname of Superman just because he's just so good at doing deals over the years and always at perfect timing."
• Donald Trump [06:07]: "China is operating the Panama Canal. And we didn't give it to China, we gave it to Panama."
• Rebecca Fung [09:14]: "Xi was infuriated by it, and that's according to people familiar with the matter, because they were caught off guard that they suddenly lost this very important bargaining chip."
• Rebecca Fung [16:12]: "It sends a very chilling signal to other Hong Kong tycoons and their kids, second generation basically."

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Additional Information:

• Merchandise: Fans can acquire show merchandise at WSJ Shop.
• Production Credits: Additional reporting in this episode by Costas Paris.

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This summary encapsulates the key discussions and insights from the episode, providing a comprehensive overview for those who have not listened to the podcast. It highlights Li Ka Shing's influential role in global business, the complexities of international deals amidst political tensions, and the broader implications for business leaders navigating such challenges.

Transcript

[Jess]

Hey, it's Jess. I'm here to say that my colleague Allison Poli is here again to guest host today's episode. Enjoy. In the glittering financial center of Hong Kong, a land known for its concentration of ultra rich, one billionaire outshines them all. Billionaire entrepreneur Li Ka Shing.

[Rebecca Fung]

Hong Kong tycoon Li Ka Shing billionaire Li Ka Shingle multi billionaire Li Ka Shing.

[Jess]

Li Cushing is an investing icon. The 96 year old tycoon is worth $36 billion and is the richest man in Hong Kong. A businessman so revered in Asia, he's earned an epic nickname.

[Rebecca Fung]

Actually, in Hong Kong, people kind of gave him the nickname of Superman just because he's just so good at doing deals over the years and always at perfect timing. So he's Superman.

[Jess]

That's our colleague Rebecca Fung.

[Rebecca Fung]

He's kind of like the Warren Buffet of Asia. You Buffett is 94. He's 96. When Li Keqing does anything, everyone stops to try to figure out what's happening and what's the meaning behind it.

[Jess]

Frequently, reporters would quiz Li Keshing about his economic forecasts.

[Rebecca Fung]

All sorts of questions about Hong Kong economy, global economy, and he's just giving his take. How does he feel about mainland Chinese investors investing in Hong Kong? More capital come to Hong Kong. Is a World cup good for Hong Kong? Is the US Federal Reserve going to cut interest rate? The analysts from journalists were just asking his take on anything.

[Jess]

For a long time, Li was prominent in both Hong Kong and mainland China. He was an early investor in China's economy, and Beijing courted him for his money and fame. And for decades, he's rubbed shoulders with Chinese leaders, which is why in recent weeks, attacks from Chinese media on Li Cushing have been so jarring.

[Rebecca Fung]

Yeah, it's surprising. It's kind of. It's very harsh, actually.

[Jess]

Pro Beijing newspapers have aggressively criticized Li.

[Rebecca Fung]

Betraying and selling off all Chinese people.

[Jess]

Yikes.

[Rebecca Fung]

So, yeah, like these editorials were quite scathing.

[Jess]

Yeah, it really sounds like it.

[Alison Poli]

Why are they suddenly attacking someone who's been the Superman of investing?

[Rebecca Fung]

So it all goes back to this one deal that kind of angered this one person in China who is more powerful and sort of has more sway than Li Ka Shing. And that person is the president, Xi Jinping.

[Jess]

Welcome to the Journal, our show about money, business and power. I'm Alison pol. It's Tuesday, April 15th. Coming up on the show, how Hong Kong's richest man ran afoul of Xi Jinping.

[Tim Higgins]

I'm Tim Higgins with the Wall Street Journal. We've got this spot to hear directly from the leaders behind the bold name companies we cover every day. Check out bold names from the Wall Street Journal wherever you get your podcasts.

[Jess]

In Hong Kong, Li Ka Shing has become so famous, there's a meme about him that his deal making prowess is so powerful it can stop typhoons.

[Alison Poli]

So how did Li Cushing end up as the richest man in Hong K?

[Rebecca Fung]

So he started with a kind of a very humble beginning.

[Jess]

Lee began his career in the 1950s by manufacturing decorative plastic flowers. He eventually turned into a savvy real estate investor and bought low priced land in 1960s Hong Kong.

[Rebecca Fung]

And then his kind of rise to fame was in 1979 when he took over this massive trading group called Hutchinson 1POA. It was considered a very like a landmark deal because, you know, in 1979, when he took it over, Hong Kong was still under British control. So that deal was the first that put a local Hong Kong person in charge of the kind of business that had always been run by British nationals.

[Jess]

Lee and his family were part of a new rising class of wealthy locals in Hong Kong. For decades. Hong Kong's free market economy allowed tycoons like Lee to prosper while the island was still under British rule, turning Hong Kong into an economic powerhouse. When the British transferred control of Hong Kong back to China in 1997, China pledged to keep Hong Kong's capitalist system for at least 50 years. In the years that followed, Li's empire only grew. His flagship company, CK Hutchison, became a global conglomerate with interest in real estate, drugstores and telecom. His assets were in Hong Kong, mainland China and around the world, including dozens of trading ports.

[Rebecca Fung]

So Likashing's Sikh Hiatisan has a bunch of different ports around the world. And among those ports, there were two ports at either end of the Panama Canal.

[Jess]

It is those two ports on the Panama Canal that have become the center of Lee's current headache. Because lately US President Donald Trump has become very interested in the Panama Canal security.

[Donald Trump]

The Panama Canal. Has anyone ever heard of the Panama Canal? Because we're being ripped off at the Panama Canal like we're being ripped off everywhere else.

[Jess]

To Trump, Li Ka Shing's Hong Kong company controlling key ports in the Canal was a problem, just as if Beijing was controlling those ports. Trump saw that as an unacceptable economic and geopolitical risk.

[Donald Trump]

And above all, China is operating the Panama Canal. And we didn't give it to China, we gave it to Panama.

[Rebecca Fung]

It seems clear that he was referring when he Said China, he was referring to CK Hutchinson, so Li Ka Shing's firm. So Trump says that China is operating in the Panama Canal, but this is not technically true.

[Jess]

To clarify, CK Hutchison owns two of the five ports on the canal, but doesn't control it. The government of Panama owns and operates the canal. All of which brings us to Li Cushing's latest and possibly most controversial deal.

[Rebecca Fung]

In early March, the group CK Hutchinson announced that it signed a agreement with a consortium of investors led by BlackRock, the world's largest asset manager, which is an American company. And in this case, the BlackRock consortium agreed to buy majority stakes in the ports on either end of the Panama Canal and a bunch of other ports around the world.

[Jess]

It would be the biggest deal of Li Cushing's career, worth nearly $23 billion. And as Trump continued to threaten tariffs, it looked like a savvy business move. It meant Lee would be dumping a bunch of his shipping ports ahead of a possible global.

[Rebecca Fung]

So, yeah, for like a business person, it makes sense to de risk, as they would say.

[Jess]

At first, China's reaction to the agreement was muted. But within weeks, things got a lot more complicated because President Trump loved the prospect of this deal. Since the company leading the purchase of those ports was BlackRock, an American company, Trump saw that as a win against the Chinese.

[Rebecca Fung]

After the deal was signed, President Trump made this speech.

[Donald Trump]

My administration will be reclaiming the Panama Canal, and we've already started doing it.

[Rebecca Fung]

President Trump kind of bragged about it as a victory. He said that we're taking it back.

[Donald Trump]

Just today, a large American company announced they are buying both ports around the Panama Canal and lots of other things.

[Jess]

What looked like a win for Trump looked like a loss for China.

[Alison Poli]

After Trump's statements, how did Xi Jinping's reaction change?

[Rebecca Fung]

It changed pretty dramatically. You know, Xi was infuriated by it, and that's according to people familiar with the matter, because they were caught off guard that they suddenly lost this very important bargaining chip.

[Jess]

U S. China relations are at their lowest point in decades, and Chinese officials saw Trump's desire for the two ports as a crucial piece of leverage.

[Rebecca Fung]

Our reporting basically showed that before CK and BlackRock signed the deal, Chinese officials were trying to include the ports in the massive negotiation deal with the US and suddenly the deal itself became geopolitically sensitive.

[Jess]

Yeah. In public remarks, BlackRock CEO Larry Fink said that the growing tariff rift between the US And China could complicate the deal. Lee and his son Victor, who now chairs Hutchison, pressed on with the deal anyway. But China would amp up the pressure to block the deal from being finalized. And its tactics are starting to present a real challenge.

[Alison Poli]

And so now what's the big question looming over this deal?

[Rebecca Fung]

Basically, the biggest question is like, is the deal gonna get done or not?

[Jess]

That's after the break.

[Christopher Mims]

I'm Christopher Mims of the Wall Street Journal. Every day we talk to the leaders behind bold name companies. And you can hear them in bold names from the Wall Street Journal, wherever you get your podcasts.

[Jess]

Lee Kashing was in a bind. His deal to sell two Panama Canal ports had landed him in the middle of a global dispute between two of the world's most powerful men, Donald Trump and Xi Jinping. Xi Jinping didn't like the deal, but he had to proceed with caution.

[Alison Poli]

Why can't China's leader simply say, nope, this isn't happening. Why can't he just kill this deal?

[Rebecca Fung]

It'll be a really, really risky move if he does that because China right now is in the middle of courting foreign investors and hoping for foreign direct investment into China.

[Jess]

Xi Jinping is walking a fine line. He's been aggressive in the trade war with the US but he's also trying to put on a charm offensive to bring foreign investment into China. Xi's message, China is a safe, fertile ground for business.

[Rebecca Fung]

And if he actually forcefully pulled the deal, it sends quite a bad signal, I think, to global investors, especially because the ports are not actually in mainland China or Hong Kong.

[Jess]

So we know that Xi Jinping is not happy with this deal. What options does Beijing have to actually put a stop to it?

[Rebecca Fung]

So there's like a three part response to this, basically. Okay, first, that there's, you know, that series of attacks on newspapers. And then secondly, officials were telling some of the Chinese state owned businesses to not do new business with Li Ka Shingle. And the state owned firms, you know, were told to hold off on any new collaboration with businesses linked to Li Keqing and his family. That's already sort of an escalation.

[Jess]

Yeah.

[Rebecca Fung]

And then there's like a third tool that Beijing can do and it has done basically, okay, that they can throw in an antitrust review.

[Jess]

The Chinese government likely can't fully block the deal through this antitrust review, but they can significantly tie it up with red tape.

[Rebecca Fung]

We had reporting that basically shows that the officials in Beijing are hoping that by sending signals about potential regulatory challenges, the two sides, Hutchinson and Blackrock, would just pull back by themselves voluntarily.

[Jess]

The delay tactics appear to be working. The Blackrock led Consortium had planned to have the deal finalized by April 2nd. That didn't happen. Now members of the consortium are exploring breaking off the Panama ports into a separate deal. In recent weeks, Beijing has also been working to line up alternative buyers should the deal fall through, according to people familiar with the matter. China's pressure tactics continue, but the biggest challenge so far has come from Panama. Last week, in the latest twist, Panama's top auditor accused C.K. hutchison of misconduct.

[Donald Trump]

Panama's top auditor is accusing the company.

[Jess]

Of owing $300 million in dues.

[Rebecca Fung]

This is the most serious hurdle yet that this deal is facing. China and Panama are close and the Chinese corporations invested a lot in Panama. This audit began after the deal was announced and now that the auditor is looking into, could potentially drag on for months. And that could definitely scuttle the deal.

[Jess]

In a statement, Panama Ports Company, the unit of CK Hutchison that operates the two ports, denied wrongdoing. A senior Panama official said that the legal process could take between six months and a year. So given all those challenges, what's going to happen to this deal?

[Rebecca Fung]

We really don't know. It kind of depends on what else at the moment that Beijing can do to make Li Ka Xing and his son care. People kept saying, and investors kept saying that Li Ka shing only has 12% of revenue from Hong Kong and mainland China. So it's not that much in the grander scheme of things. Maybe he just doesn't care. However, 12% is still 12%.

[Jess]

Right?

[Alison Poli]

It's not nothing.

[Rebecca Fung]

It's not nothing. Yeah. So I think right now the decision kind of rests within Li Keqing and his son and you know, his close advisors to basically weigh going through with the deal. How much would that anger Beijing and what's sort of the trade off here?

[Jess]

What does this say about Li Keqing's legacy?

[Rebecca Fung]

I mean, he's 96. It does seem to be a bit of an unfortunate final act of his decades of business career. But I think what it says more is just that the company that Li Ka Shing built many decades ago is now in different environment.

[Alison Poli]

So if other tycoons are watching the so called Superman get punished this way, what message does that send to them?

[Rebecca Fung]

It sends a very chilling signal to other Hong Kong tycoons and their kids, second generation basically. And these tycoons will be watching very closely because many of these tycoons are the people and the families who made Hong Kong, Hong Kong over the years. And it basically says that, you know, doing business is no longer just business. There's political risk involved in that. I think they're going to ask themselves which side they want to be on, whether it's us or China. And I'm not sure which side they will end up choosing. But that's a question that they would definitely ask themselves because it seems now that you can't just do like a commercial deal. You do need to choose a side.

[Jess]

That's all for today. Tuesday, April 15th. The Journal is a co production of Spotify and the Wall Street Journal. Additional reporting in this episode by Costas Paris. Thanks for listening. See you tomorrow.

[Tim Higgins]

Every day, Wall Street Journal reporters talk with the most powerful, influential and interesting people. And now we're bringing some of those conversations directly to you. I'm Tim Higgins.

[Christopher Mims]

And I'm Christopher Mims. We're teaming up to ask tough questions of the leaders behind the bold name companies found in the pages of the Journal every day. Are you going to build that $20,000 vehicle?

[Rebecca Fung]

No, because that market sucks.

[Tim Higgins]

Check out bold names from the Wall Street Journal wherever you get your pod.