China has come out swinging after Panama’s high court ruled against a Hong Kong-backed company’s right to operate key ports at the Panama Canal, vowing the government will “pay a heavy political and economic price” if it did not reverse course.

In March last year it seemed that Mr Trump’s canal issues might be resolved with a commercial transaction. A consortium of Western companies would acquire the ports as part of a wider deal with CK Hutchison.

The Panama Canal has been thrust into the middle of a power struggle between the U.S. and China, the world's two largest economies.

Panama’s move to void CK Hutchison’s deal fuels fears of broader asset seizures, with analysts warning of rising risks for Chinese operators in the US sphere.

By Elida Moreno PANAMA CITY, Feb 5 (Reuters) - Panamanian President Jose Raul Mulino said on Thursday that the concession of contracts to operate two ports held and operated for nearly three decades by Hong Kong's CK Hutchison Holdings will "never again" be issued to a single company.

China has backed a high-profile legal case against the Panamanian government over control of the Panama Canal.