China-Mexico relations: A new, meaningful approach

Over the last decade, relations between China and Mexico have not been entirely satisfactory. In late 2014, Mexico abruptly cancelled the tender for the construction of a high-speed train line between Mexico city and Queretaro, which was won by a consortium of Chinese companies associated with Mexican partners. We could also mention the abandonment of a 40 percent Chinese-owned retail complex in Cancun. These episodes had a clear impact on China’s weak presence in the country. This lack of confidence is never a good omen in business. While China is raising its international profile, it was very careful if not inconspicuous with Mexico. Accordingly, Chinese investments fell far short of what they were in other countries of the same size.

Slowly but steadily, this situation is likely to change. First of all, Mexico with its huge population is a vibrant and unavoidable market. Infrastructure needs are paving the way for experienced companies — for instance, the ones that have reshaped China. Contrary to a popular belief that prevails sometimes in Mexico, China isn’t manufacturing only low-range products. For the last 20 years, fast-growing tech companies have been spreading. Many are now world-class firms, capable of bringing their know-how everywhere. For those companies, there is no problem complying with local regulations, which was not always the case before.

There is another reason. Despite their geographical position, Mexico and China have the same issue. The importance of the United States in their economies isn’t as self-evident anymore. Of course, Mexico is by far more dependent. Mexico’s geographical proximity to the US has not only shaped Mexico’s history, but also played a key role in defining the development of the country’s economy. For years, many in Mexico have remembered well an old saying: “Poor Mexico, so far from God and so close to the United States”. US President Donald Trump’s recent measures on customs fees and unpredictable statements bolster this feeling. Mexico should broaden the spectrum of its international partners. For its part, buoyed by its dynamic economy, China is becoming a locus for international growth. China is deeply engaged in the Belt and Road Initiative..

As a regional power, Mexico should play a key role in implementing added-value projects in its territory. As they are already established in Mexico City, prominent Chinese banks Bank Of China and ICBC are the main wings of this strategy. Private Chinese corporations are charting a path into Mexico. As examples, BYD, a Shenzhen-based manufacturer of automobiles, buses and rechargeable batteries, and Far East Cable, an energy solutions provider from Yixing, Jiangsu are preparing large investments.

However, business environment safety is an absolute prerequisite for a successful move. In recent years, many were disturbed by the endemic corruption that prevailed in Mexico with had severe consequences. The firm and clear statements stressed by the four presidential election candidates are a strong sign of a new era — and a strong welcome to Chinese investment — in order to ensure a better life for all Mexicans.

The author is a member of the Charles de Gaulle Foundation.