What the Impact of Chinese Investments Could Mean for Mexico
Written by Jacqueline Christ, Diplomatic Courier
November 13, 2017
Move over, America. China is now taking a stake in Mexico’s infrastructure. In the past couple years, China has invested billions of dollars in Mexico and other Latin American countries. This year, Chinese President Xi Jinping announced that China would invest $250 billion in Latin America between 2015-2018, with the goal of $500 billion in trade with Latin American countries. In Mexico, Chinese imports have steadily increased since 1999, with nearly $70 billion in imports in 2015, according to data from Atlas.
China is geared to take an even bigger cut of Mexico’s foreign domestic investment as the United States threatens negotiations in the North Atlantic Free Trade Agreement (NAFTA). Earlier this year, President Donald Trump announced that he would renegotiate the terms of NAFTA, affecting US-Mexico trade agreements. Mexico heavily relies on trade with the US, particularly agricultural trade. Mexico’s meat and corn exports have steadily increased since the implementation of NAFTA in 1994. These exports are essential to Mexico’s economy. A revised trade deal with the United States could jeopardize the intra-bloc trade that has skyrocketed between the two nations for 20 years. According to a 2014 study by the Review of Economic Studies, Mexico’s intra bloc trade increased by 118% since NAFTA.
However, NAFTA could also be one of the reasons Mexico’s welfare has steadily decreased in the past two decades. According to a study by the Center for Economic and Policy Research, the number of Mexicans living below the poverty line has increased since the start of NAFTA in 1994, with 14.3 million more Mexicans living below the poverty line in 2012. While seasonal labor in export industries in Mexico increased by nearly 3 million from 1991-2007, 4.9 million Mexican farmer families were displaced. The lack of a strong economy in Mexico has led to the influx of Mexican migrants to the US, with the number of immigrants increasing from 4.5 million in 1990 to 12.6 million in 2009.
Chinese investments could be the solution Mexico needs.
The Chinese National Oil Company (CCNOC) has already made at pass at oil stakes in Mexico. Of the ten oil blocks Mexico put up for auction in December 2016, CCNOC bought two of them, while other blocks were secured by US companies Exxon Mobil and Total.
Along with this deal, the Chinese Mexico Fund was the largest stakeholder in the Altán Redes telecommunication project that was signed in January. The project will create a wireless network that is set to cover 92.2% of the Mexican population...
... Today, in light of shaky US-Mexico relations, China is starting to jump on the Mexican market...
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