Experts Believe That There are More Opportunities for Chinese Investment in Mexico
Mexican Undersecretary of Foreign Affairs, Jesus Seade, believes that the best way to improve its partnership with the Asian economic giant is to attract more Chinese investment in Mexico.
Several experts believe that more Chinese investment in Mexico should be sought. Although it is anticipated that the China – Mexico commercial relationship will continue to expand and to deepen through traditional trade, some are of the opinion that growth of the economic partnership between the two nations can be most effectively achieved as a result of more Chinese investment in Mexico. The undersecretary for North America of the Secretariat of Foreign Affairs (SRE) of Mexico, Jesus Seade, is one such individual.
Chinese investment in Mexico will take place in the manufacturing sector
According to Seade, Chinese companies’ production of goods in Mexico will continue to increase exponentially to meet the demands of the largest market in the world, the United States. Although there is interest on the part of Chinese businessmen in other places in the hemisphere such as Panama and Costa Rica, the official from the Secretariat of Foreign Affairs believes that Chinese investment in Mexico will be significant in the coming years. There is much room to grow considering the fact that Chinese investment in Mexico in 2018 only reached US $250 million, while trade between Mexico and the United States totaled approximately US 12.2 billion. According to SRE estimates, China could be the source of 75% of the world’s total foreign direct investment (FDI) over the course of the next ten years.
One prominent niche for Chinese investment in Mexico in the coming years may be in the production of electric powered cars and car parts. The coordinator of the Center for China-Mexico Studies of the Autonomous University of Mexico (UNAM), Enrique Dussel, recently explained Chinese investment in Mexico in the auto parts sector has increased significantly since 2015. In addition to their participation in the conventional auto parts industry, however, he feels that the Chinese companies may “go one step further” and look at the possibility of integrating themselves into the developing North American supply chain for the manufacture of electric vehicles. He feels that Chinese investment in the short term in this sector can be significant, as the demand for electric powered transportation in the US will only continue to grow in the foreseeable future.
The Washington partner of the consulting firm Baker & McKenzie, Miguel Noyola, believes that part of China’s economic strategy will be to position itself to take advantage of the privileged economic position that Mexico occupies in the North American region. He believes that Chinese investment in Mexico will benefit greatly from the network of free trade agreements that Mexico has put into place since the signing of the NAFTA in 1994.
Chinese investment in Mexico infrastructure projects will be significant
In addition to manufacturing, it is forecast that Chinese investment in Mexico in upcoming infrastructure projects may total approximately US $25 billion. This capital influx will come mainly from approximately 100 companies that are affiliated with the Mexico-China Chamber of Commerce and Technology. An example of the projects that these firms will participate in includes the Mayan train and the construction of the Santa Lucia Airport. It is the plan of the government of Andres Manuel Lopez Obrador (AMLO) that a new civilian international airport to service Mexico City be built on the grounds of the Mexican military’s Santa Lucia Airport Base. The first phase of the project will include the construction of two runways and a new terminal. Construction of these new facilities began at the end of April 2019.
In addition to increased Chinese investment in Mexico, AMLO’s government will seek to expand traditional trade with its Asian partner. Currently, Mexico sends approximately 80% of its exports to the United States. The present Mexican administration seeks to elevate their bilateral linkage to a comprehensive strategic partnership.