On 13 January, at the China’s Days presentation in Mexico City, China’s Ambassador to Mexico Zhu Qingqiao said that Industrial and Commercial Bank of China (ICBC) and Bank of China (BOC) will allocate $600 million to build an oil refinery in the Dos Bocas Port on the Gulf of Mexico coast in the south-eastern state of Tabasco.
The event was organised by the Mexican Secretariat of Economy to promote bilateral relations. According to the diplomat, it is one of the leading infrastructure projects of Mexican President Andres Manuel Lopez Obrador.
Mexican Secretary of Energy Norma Rocio Nahle Garcia later said that the plant will be the largest in Mexico with a capacity to process 340,000 barrels per day. For his part, President López Obrador said that the new plant will help Mexico reduce its dependence on fuel imports from the US. The facility is expected to be built within three years.
China has shown a keen interest in investing in energy and infrastructure projects in Mexico. Meanwhile, the activity of Chinese investors in Mexico is not limited to these areas, Director of the Centre for Latin American Studies at Anhui University Fan Hesheng told Sputnik:
“China's investment in Latin America's energy and infrastructure sectors is currently significant. In general, the interest of Chinese business in investing in Mexico is broad and is not limited to certain areas; it is largely determined by the security conditions of investments that are created in the Mexican market. Mexican efforts to ensure investment security will find an appropriate reaction from the Chinese side, which has a potentially high interest in cooperation with Mexico,” the expert said.
Mexico’s ambassador to China, Jose Luis Bernal, said at the presentation in Mexico City that at least three Chinese automakers are ready to start producing cars in Mexico or expand existing operations. These include: Chongqing-based car maker Changan; BYD, electric vehicle maker that does not yet have manufacturing facilities in Mexico; and Anhui Jianghuai Automobile Group, known as JAC Motors, which is considering expanding its business in the local market. The Mexican diplomat made it clear that its Mexican partners are not afraid of competing with Chinese automakers but instead see it as an incentive for one of Mexico's leading export industries.
The day before, on 12 January, the Mexican bank Grupo Financiero Banorte announced the signing of an agreement with China Export and Credit Insurance Corporation, Sinosure. This Chinese insurance company finances projects in Mexico related to imports from China. According to the terms of the deal, Banorte, which has the highest S&P rating among Mexican banks, will provide credit to Mexican enterprises and other organisations that want to buy Chinese goods or services. Sinosure, in turn, will provide Banorte with insurance and credit guarantees to support Chinese exports to Mexico.
Today, China is Mexico's second-largest trading partner. China accounts for about 10 per cent of Mexico's export-import operations. Mexico, in turn, is the second most important country in Latin America for Beijing, according to China’s Ambassador Zhu Qingqiao. During the presentation in Mexico City, he said that from January to November 2019, the trade turnover between China and Mexico increased by 6 percent, year-on-year, reaching $55 billion. Accumulated investments by Chinese companies in Mexico in 2019 exceeded $1.2 billion, involving 200 Chinese companies working there.
According to Mexican Foreign Relations Secretary Marcelo Ebrard, the President of Mexico, for his part, instructed investors to develop broader tactics for their presence in the Chinese market, particularly in the field of innovation and technology, the online newspaper El Diario reported.
The Spanish newspaper also quotes the opinion of Mexico's Economy Secretary Graciela Márquez. She believes that the ratification of a new trade agreement between Mexico, the United States, and Canada, known as the T-MEC, “renews China's interest” in accessing the North American market.
This motive is the one that largely determines the growth of Chinese influence in Mexico, in what's traditionally thought of as “America's Backyard”, believes Russian expert Alexander Kharlamenko, a research fellow with the Institute for Latin America at the Russian Academy of Sciences:
“First and foremost, Mexico for China is a window into the North American [common market]. It is not just one of China's spheres of influence on the continent, due to the development of Sino-Mexican relations. For China, Mexico is now an integral part of the entire North American economy, with a huge number of branches of North American multinational corporations. These corporations have moved part of their technical process to Mexico. Its market is more a part of the American economy for China than just a part of the traditional foreign economic relations. This gives China certain opportunities to overcome the barriers of protectionism and avoid the sanctions that the US is increasingly resorting to,” the Russian expert said.
The encouragement by the Mexican side of the revitalisation of Chinese companies and investments to diversify the Mexican economy will be accompanied by a clash of interests between China and the United States in the country and increased competition for new market niches. According to Russian expert Alexander Kharlamenko, increased contradictions will affect that part of the US capital, which is interested in maintaining high barriers to trade and supports Trump’s sanctions and protectionism. However, there is another part of American capital that is interested in developing integration ties, not only with Mexico but also with the Asia-Pacific region through Mexico, and thus with China.
The views and opinions expressed in the article do not necessarily reflect those of Sputnik.