Heightened US-China tensions present economic opportunities for Mexico

MEXICO CITY (CN) — Seeing the intensifying friction between the United States and China as an opportunity to deepen economic ties with its second-biggest trading partner, Mexico’s newly appointed ambassador to China, Jesús Seade, announced in early September that he intends to “strengthen bonds of friendship” with the Asian nation. 

His plan includes promoting Chinese investment in Mexico’s industrial, telecommunications and agricultural sectors, among others. 

Margaret Myers, director of the Asia & Latin America Program at the Washington-based think tank the Inter-American Dialogue, said Mexico has long expressed a desire to do more business with China. She noted the recent trend of U.S. companies looking to bring manufacturing closer to home, a process called nearshoring, and how this has opened new doors for Mexico.

“That is something that the current government in Mexico has noted publicly, that this is perhaps a moment of opportunity for Mexico, given shifting geopolitical dynamics and certainly new thinking about supply chains and production,” she said.

Myers cited agreements with China by then-President Enrique Peña Nieto, but highlighted the difference between expressed interest and real-world results. “We’ve seen expressions of interest time and time again. This is not a new thing.”

What has changed is the international situation. “This is a moment when Mexico is more open than ever, perhaps — at least from a geopolitical perspective — to exploring possibilities with China.”

Not only is the time right, but the situation is also in capable hands, according to Sergio Ley, who served as Mexico’s ambassador to China from 2001 to 2007. Ley thinks Seade’s programs to develop trade with China “will create a strong system of support for Mexican businesses.”

But it won’t be easy. “Without a doubt, the telecommunications sector will be the most difficult for Seade to develop,” said Ley, who recognized the importance of China’s 5G internet technology. “No other country is doing it on the same level.”

Seade will also attempt to increase Chinese investment in Mexico’s agricultural sector. Agricultural exports to China have been on the rise in recent years, especially of products like avocados, pork and beef. Ley said Mexico is strategically located to sell food products to the North American market. “If Chinese companies don’t move to manufacture outside China’s borders, they’ll lose clients,” he said.

Mexico’s agricultural sector is ready and willing to fill that demand. Luis Fernando Haro, director general of the National Agriculture and Livestock Council (CNA), praised the move, even going so far as to call market diversification and increased trade with China “fundamental” to the growth of the sector it represents. 

Haro cited China’s place at the top of the list of world importers of food and drinks since 2019, but highlighted Mexico’s failure to take advantage of the increased demand. “Although Mexican agricultural exports to China have grown significantly in recent years, our participation is barely 0.5%,” he said. The CNA urged Ambassador Seade to make its sector a priority in his dealings with China and even plans to install a permanent representative of its own in the country in an attempt to meet these goals. 

But while the growing antagonism between the United States and China has created opportunities, it also presents the greatest threat to the hoped-for growth. Ley said that if the two world superpowers fall into military conflict, the heightened tensions “are going to throw off the equilibrium between the countries involved, and it’s going to be complicated.”

Apart from such a worst-case scenario, however, diversifying Mexico’s international trade partners — and thus, to a certain degree, diminishing its dependence on the United States — will most likely have little effect on the overall economic relationship between the two neighbor countries. 

“Economic ties between the U.S. and Mexico are so profound that a slight increase in China-Mexico activity is not going to fundamentally change that dynamic,” said Myers. “It’s always good for countries to have an abundance and a diversity of economic partners, so certainly one could understand why Mexico would be interested in doing so. But China will not replace the U.S.” 

Courthouse News correspondent Cody Copeland is based in Mexico City. Follow him on Twitter.