Mexico, China, and the Challenge of Foreign Trade

As of August 2023, the trade balance with China indicates that this country is in second place after the United States, our main partner and neighbor.

Questions about Trade with China

A possible explanation for our trade with China not decreasing might be that investments are not moving to Mexico as expected. In addition, China could be using Mexico as a bridge to the United States, benefiting from tariff jumps, messaging rules, simulation of operations, and evasion of rules of origin.

Post-Pandemic Trade Dynamics

After the pandemic and the trade war between the United States and China, trade with Mexico has become more dynamic. It is important to recognize that China attracts more investments than the United States and Europe, becoming an attractive market for business. Although its economic growth has changed, it remains an important consumer market. Much manufacturing comes out of China but stays in Asia to evade U.S. tariffs without losing the Chinese market.

More than Half a Century of Trade Relations

The trade relationship between China and Mexico, with more than half a century of history and constant growth, demonstrates that no region of the world is completely self-sufficient. Trade between both countries, including operations through third parties, reached approximately 116 billion dollars last year.

Strategies to Consider

The government must promote technology, innovation, and investment in infrastructure, while the private sector should focus on logistics. It is crucial to offer credits to SMEs to integrate them into export value chains and take the relocation of new investments seriously.

China and Its Focus on Investments

China invests mainly in developing countries. Although it has not signed any trade agreement with Mexico, it is vital for our country to focus on attracting investments, developing innovative companies, and taking advantage of strategic nearshoring.

Economic Outlook for 2023

In the first eight months of 2023, Mexico recorded a trade deficit of 8,602 million dollars, a significant improvement compared to the same period last year. ECLAC highlights the contraction of world trade and suggests diversifying exports and strengthening regional integration. Despite a decrease in mining and oil exports, manufacturing has grown, replacing China as the main trading partner of the United States.

The Challenge of Nearshoring for Mexico

Secretary of Foreign Relations Martha Bárcena, during the 29th Foreign Trade Congress, expressed concern about whether Mexico really understands the importance of nearshoring, an opportunity window in which other countries such as Vietnam, India, Taiwan, and Canada have progressed more than Mexico.

Conclusions and Future Expectations

With the next administration on the horizon, questions remain about Mexico’s ability to adapt and take advantage of the opportunities of nearshoring and Foreign Trade.

At Supply Chain de México, Target Consulting and Grupo Ei we have the knolage, tools and experience to relocate in a single solution your company to Mexico.

X: Manuel Díaz