Writing on X, Mulino "strongly" rejected the threat from the Beijing office overseeing affairs in semi-autonomous Hong Kong, which came after Panama's Supreme Court invalidated CK Hutchison's port concession.

US President Donald Trump last year put Panama under pressure to cancel Hutchison's contract by threatening to reclaim the US-built waterway over what he claimed was China's outsize influence on the canal.

Last week, Panama's Supreme Court ruled that the concession was "unconstitutional" and found it had "a disproportionate bias in favor of the company" without "any justification" and to the "detriment of the State's treasury."

Reacting on its WeChat account, China's Hong Kong and Macao Affairs Office accused Panama of buckling to outside pressure, Bloomberg reported.

"Panamanian authorities must recognize the situation and correct their course," the office was quoted as saying.

"Persisting in this misguided path will result in a heavy price, both politically and economically," it added.

Mulino reacted angrily to the threat, insisting that Panama was a country that upholds the rule of law "and respects the decisions of the judiciary, which is independent of the central government."

He added that the foreign ministry would issue a statement on the matter "and adopt the corresponding decisions."

The Panama Canal, which connects the Atlantic and Pacific oceans through Central America, handles about 40 percent of US container traffic.

Since 1997, Hutchison has managed the ports of Cristobal on the interoceanic canal's Atlantic side and Balboa on the Pacific side.

After Trump threatened last year to seize the canal, Panama's independent comptroller general reviewed Hutchison's contract and subsequently recommended it be annulled.

The Supreme Court ruling backed the comptroller's view that the terms of the concession ran counter to Panama's interests.

The Panamanian government has tapped Danish company Maersk to temporarily take over management of the port terminals until a new concession is awarded.