Rising red tide

Panama: To the consternation of U.S. policymakers, China is gaining more and more influence over the Panama Canal | Clint Rainey

PANAMA—Diario Navarro watched the American tourists, perched at the waterline of the Panama Canal's Miraflores locks, wave at the approaching Chinese vessel Xuan Wu Hu. Several crewmen on the massive tanker peered down indifferently, not reciprocating.

The tourists dropped their hands. Navarro, 54, a Panamanian who runs a company that organizes canal tours, laughed—but without amusement. He sees his beloved canal falling under the control of Chinese companies and forced to jump at the Beijing government's command.

Enrique Cuevas, a banker in Panama City, who often sails by the port in his small catamaran, says canal traffic these days almost entirely consists of cruise liners and Chinese tankers. China, the canal's biggest customer, shipped 18 million tons through the canal to the East Coast of the United States in 2005 alone.