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Mexico and China: trending down

Tuesday, November 20, 2012

Chinese companies, mostly state-owned, are making massive investments in South America, mostly in resource industries.

Meanwhile, commercial relations between China and Mexico are – if anything – getting worse, partly because Chinese manufacturing competes with Mexico, which regularly complain about dumping of cheap imports, including the made-in-China statues of the Virgin of Guadalupe, on sale outside the Basilica in Mexico City.

As far as the resource sector is concerned, Mexico’s oil industry until last month has been a state monopoly.

Nor have Chinese companies acquired companies in Mexico’s mining or other types of extraction operations.

Bilateral business looked more promising three years ago, when Ricardo Salinas, the retail and media billionaire, announced plans to build Chinese cars in Michoacan State, going so far as to lay the cornerstone of a plant.

But the project was later shelved.

Also problematic was the construction of a Chinese-owned electronic-parts factory, whose products were to be exported to the United States duty-free, under the terms of the North American Free Trade Agreement.

But the U.S. claimed that the plant’s exports didn’t qualify for preferential treatment, while the plant’s owners have claimed that the Mexican government never helped them to get the necessary approvals.

The result is that Chinese officials have told companies interested in investing in Mexico that Beijing would not provide the same level of support, that if often gives its investors in other countries.

President-elect Enrique Peña Nieto may achieve a rapprochement with China, particularly if he succeeds in his plan to open the oil sector to foreign investment.

For now, at least, the trend is down.