China is emerging as the right partner for investment in the Mexican automotive and mining industries, as the Mexican government moves to strengthen bilateral relations and diversify markets, a Mexican official said.
Once the United States-Mexico-Canada Agreement (USMCA) comes into effect, China can become a “major” investor in the Latin American country and form part of the new government’s drive toward shaping the commercial pillars of innovation, inclusion, and diversification, said Mexico’s Deputy Economy Minister Luz Maria de la Mora.
“It’s very likely that Chinese investment will come to Mexico, establish itself in Mexico, and develop products in Mexico,” the Mexican official said in a recent interview with Xinhua.
“Some supplies will come to Mexico from China, other supplies will be provided by Mexico, and the idea is that the North American chain continues to grow,” she said.
The official noted that Mexico imports a large amount of machinery, equipment, supplies, and semi-finished products from China, which, depending on the case, may head to the United States, Canada, and other parts of the world in a complementary way.
Mexican exports also contribute, to a certain extent, to promoting links between the United States and China, as a good amount of Chinese capital in America is involved in Mexican productive processes and the final products will head for the United States, de la Mora said.
The administration of Mexican President Andres Manuel Lopez Obrador, who assumed office on Dec. 1, 2018, has a great interest in promoting relations between Mexico and China.
“We are a global factory, we are integrated and we contribute with different parts of the chain, and I think that China can also contribute to Mexico and can find in Mexico an ideal partner to add value and to continue rising in the value chain,” de la Mora stated.
“I think that the type of relationship that we are looking for with China is greater investment in the productive sector,” she added.
Mining is one of the main sectors that have interest in Chinese fund, said the official, adding that both side are poised to gain since China is a leading importer of minerals in the world.
“China acquires many of the minerals that Mexico exports, like copper, zinc, etc., so I think there is also a way of collaborating in not only the exportation of minerals, but also starting to think about how we can process minerals in Mexico with Chinese capital,” she said.
“I think there is a lot of room. China is an important importer of these types of products, while Mexico is an important producer, so we want to take it to the next level,” she added.
The automotive industry, a strategic sector for Mexico, will also present good opportunities for Chinese investment, and other areas for closer cooperation include manufacturing, like auto parts, electronics, machinery and equipment, medical devices, and even chemical products, she said.
China is now an important investor in auto parts, iron and steel, electronics, and many other products in Mexico, which has contributed to the growth of capital from the Asian country from 7 billion U.S. dollars in 2000 to 90 billion dollars in 2018, she said.
“In fact, there are niche markets where Chinese investment is welcome, and what we want is to attract productive investment in the sector of manufacturing,” she said.
In the areas of food and agriculture, Mexico will continue to look to advance in the sanitary protocols that will allow the export of sorghum and bananas to China, so that they can be added to the long list of products that are already available to Chinese consumers, like tequila, avocados, berries, and pork, among others, she said.
Mexico and China have common objectives and similar interests in many global affairs and both of them are members of many multilateral organizations like the International Monetary Fund, the World Bank, the United Nations, and the Group of 20, said de la Mora.
“The agenda with China is a constructive one. It’s an agenda of greater commercial exchange, greater investment, greater tourism, greater cultural exchange, and seeking political agreements, because we obviously want to have a peaceful world and, to the extent that it is possible for us, we can contribute,” the official said.
“The Mexico-China relationship is one that has enormous potential: China is the second largest economy in the world today, Mexico is the fifteenth, so we are important players in the global economy,” she added.
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