President José Raúl Mulino says, according to AFP, that Panama's embassy in Beijing has been informed that the country will not renew its commitment to China's massive infrastructure plan.
USA's President Donald Trump has previously threatened a military intervention to regain control over the canal, as he believes that American ships passing through it are paying "ridiculous" fees, and has accused China of gaining influence over the important shipping route.
The USA claimed on Wednesday that its government vessels will be allowed to sail through the Panama Canal for free.
"American government vessels can now pass through the Panama Canal without fees, saving the American government millions of dollars per year," writes the American Foreign Ministry in a post on X.
However, the Panamanian authority responsible for the canal's operation denies this, as does the President, who calls the claim an "absolute lie".
José Raúl Mulino has ruled out negotiating the canal's ownership, emphasizing that it belongs to Panama and denying that China controls the canal in any way.
USA's Foreign Minister Marco Rubio visited the country on Sunday and hinted that Panama had offered concessions.
