Mexico-China Commercial Relations Grow StrongerBy Sofía Hanna | Wed, 06/15/2022 - 09:23
Asian trade and financial institutions are reshaping capital flow worldwide, especially after the uncertainty that followed the last COVID-19 lockdowns. The relationship between Mexico and China is also growing stronger, as trade grew by 22 percent from 2019 to 2021. Both countries are celebrating the 50th anniversary of re-establishing diplomatic relations.
China's reserve, which is considered the strongest foreign stash of Treasuries, fell by US$68 billion in April, representing a 2 percent drop, the largest monthly drop in more than five years. As a major trade and manufacturing hub, economic and logistic changes in China affect the entire global economy. COVID-19 lockdowns occurring earlier this year deeply affected trade, leaving ships piled up off the coast and in the channels around ports. Thousands of containers were retained in ports, putting global supply chains in check again just when analysts were confident of their recovery after the pandemic. The role China plays in the world’s general economy has made itself clear in the last months and is concerning analysts, reports the BBC.
Despite hurdles, Mexico and China have increased their trade balance by over 22 percent in 2021 in comparison to 2019. The balance reached US$110 billion in 2021 thanks to the greater interest of the Asian giant in the Mexican market, as reported by EFE. The global trade situation and the relocation of manufacturing activities in North America are unique opportunities for Mexico to expand trade with China and also attract investment. "This opens spaces for the Mexican government to establish a strategic alliance with the Chinese, especially because of the complementarity they could have in various sectors, including electronics and the automotive sector, but also to export from here to Asia," said Amapola Grijalva, President, Chinese Chamber of Commerce in Mexico, during the 50th-anniversary celebrations.
China’s main exports to Mexico are capital and intermediate goods for the manufacturing industry and high-tech products for the solar sector. To continue building the relationship between both countries, the Chinese Chamber of Commerce will seek to support Mexican businesses through a Business Verification Center that will provide advice to deal with new complexities and the absence of a trade agreement.
However, China is applying to join the Trans-Pacific Partnership Comprehensive and Progressive Agreement (TPP-11), of which Mexico is also a part of, according to Forbes. A successful application could increase and simplify trade exchanges.