The U.S. has been Panama’s biggest investor for decades, pouring billions into finance, logistics, tourism, and trade. But since 2017, when Panama cut ties with Taiwan and recognized Beijing, China has aggressively expanded its footprint—especially in infrastructure, ports, and major construction projects.
Why Does This Matter?
China’s investments aren’t just about business—they’re often tied to debt-trap diplomacy. This happens when China finances big projects in smaller countries, but under tough loan terms. If the country struggles to repay, China gains leverage—sometimes even control over key assets. This has happened in other nations, where China has taken over ports, railways, or critical infrastructure when debts weren’t paid.
Panama’s Position
Right now, the U.S. still leads in total foreign direct investment (FDI)—meaning American businesses have put more long-term money into Panama than China has. But China’s influence is growing fast. It’s not just about money; it’s about strategic control. If Panama takes on too much Chinese-backed debt, it could find itself economically dependent on Beijing—risking sovereignty over its own key industries.
Bottom Line
For now, the U.S. remains Panama’s top investor, but China is playing the long game. The question is: Will Panama benefit from Chinese money, or will it find itself trapped in a costly deal it can’t escape?