China is lashing out at Panama after the country's top court torpedoed a key Chinese-linked operations contract at the Panama Canal, warning that the Central American nation "will inevitably pay a heavy price" if it doesn’t reverse course.

Under immense US pressure from the Trump White House, Panama’s Supreme Court last week ruled to void the operating license of Hong Kong–based CK Hutchison for ports on both ends of the canal - Balboa on the Pacific side and Cristóbal on the Atlantic.

The decision effectively ejects a Chinese/HK-connected operator, specifically the Panama Ports Company which is the subsidiary under CK Hutchison, from one of the world's most strategic maritime chokepoints.

This was celebrated as a win by Washington, as President Trump has long made clear his intention to reassert American influence and control over the Panama Canal. Starting early in his administration Trump called it "vital to our country" and insisted that "it’s being operated by China."

But China’s State Council Hong Kong and Macao Affairs Office has newly blasted the court's decision as "logically flawed" and "utterly ridiculous" - making clear that the ruling is vehemently opposed by both the Chinese government and the Hong Kong Special Administrative Region government.

"The Panamanian authorities should recognize the situation and correct their course," the office said, as translated in various media reports.

"If they persist in their own way and remain obstinate, they will inevitably pay a heavy price in terms of politics and economics!" the blistering statement added.

Beijing is now threatening an array of political and economic consequences, also as it prepares its legal challenge to the supreme court ruling:

China has reportedly instructed its state-owned enterprises to suspend discussions on new projects in Panama following the Central American country's decision to nullify CK Hutchison Holdings’ port operations contract, Bloomberg reported.

Sources familiar with the situation have indicated that the move is part of Beijing’s broader response to the legal ruling that affects two ports along the Panama Canal.

This decision is expected to potentially impede investments worth billions of dollars. In addition, China is advising shipping companies to consider alternative routes for cargo, provided these do not incur significant additional expenses, according to unnamed sources.

Furthermore, Chinese customs are increasing inspections on imports from Panama, including bananas and coffee, which could affect ongoing trade.

So now Panama finds itself in a precarious position, smack in the middle between Trump's controversial 'Donroe Doctrine' and Beijing, with Panama's President Jose Raul Mulino stating amid these threats of retaliation that he "strongly" rejects the Chinese government’s threats.

He framed this as about upholding the rule of law and made clear he "respects the decisions of the judiciary, which is independent of the central government." Still, he's about to feel some pain from China, and there's probably nothing at all Panama City can do about it.