Panama’s supreme court invalidated a contract in late January that had allowed Panama Ports Company, a subsidiary of Hong Kong-based firm CK Hutchison, to operate two ports on the Panama canal since 1997.

The decision, which ruled that the laws allowing the firm to operate the ports were “unconstitutional”, comes one year after the US president, Donald Trump, threatened to take control of the canal to limit Chinese influence over the waterway.

Beijing reacted to the ruling angrily, calling the judgment “absurd, shameful and pathetic”. It also said the Panamanian government will pay “a heavy political and economic price” for evicting the company from the ports. The ruling is the latest sign that China’s ambitions in the region are losing momentum.

Chinese influence in Latin America is a relatively recent phenomenon. Since 1823, when President James Monroe declared the western hemisphere closed to further European colonisation, the US has largely maintained strict control over the region’s affairs.

But that changed after the end of the cold war in 1991, with successive US administrations reducing their focus on Latin America. This allowed emerging superpowers such as China to assert their influence in the region.

China is now the top trading partner for South America and is becoming the largest for Latin America as a whole. It is also a........

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