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Abstract
China’s relationship with Latin America countries experienced a process of significant expansion over the past two decades. Even though Latin America was not considered as part of the BRI when it was first established, China designed its economic strategy toward the region by emphasizing investment, financial and industrial capacity cooperation, besides trade. Afterwards, China invited Latin American countries to participate in the BRI at the China–Community of Latin American and Caribbean States (CELAC) Ministerial Forum in Santiago in January 2018. Twenty-one Latin American and Caribbean (LAC) countries have signed up to the BRI. However, there are few LAC countries that have not done so, among them the region’s largest economies such as Brazil, Mexico and Colombia, although Brazil is with full AIIB membership. This paper focuses on the specific economic relations between China and Mexico, as far as Mexico is the less involved LA country into the BRI, and Mexico’s position toward China is more aligned with that of its North American partners than to the Latin American countries. This article analyzes the specific situation of Mexico, characterized by its deep integration and dependency on the US market and examines the current economic relations of China and Mexico, considering the impact of the United States–Mexico–Canada Agreement on the bilateral economic relations. The structure of bilateral trade between Mexico and China is also examined, using the Grubel-Lloyd Index (GLI).
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
2 As of March 2022, the number of countries that have joined the Belt and Road Initiative (BRI) by signing a Memorandum of Understanding (MoU) with China: Antigua and Barbuda, Argentina, Barbados, Bolivia, Chile, Costa Rica, Cuba, Dominica, Dominican Republic, Ecuador, El Salvador, Grenada, Guyana, Jamaica, Nicaragua, Panama, Peru, Suriname, Trinidad and Tobago, Uruguay, Venezuela.
3 We refer to BRI rather than OBOR Initiative, which is the name most recently used by Chinese government sources.
4 Fung et al. (Citation2017); Hackenbroich and Shapiro (Citation2018).
5 Xinhua (Citation2017).
6 Among these, 44 countries are in Sub-Saharan Africa; 35 BRI countries are in Europe & Central Asia; 25 BRI countries are in East Asia & Pacific (including China); 21 BRI countries are in Latin America & Caribbean; 18 BRI countries in Middle East & North Africa; 6 countries are in Southeast Asia.
7 A MoU is an agreement for parties to the BRI. These MoUs follow a common format, providing a general framework without specific commitments. The first part sets out the objectives, including closer political ties and economic links, and principles of cooperation such as win–win progress, respect for the concerns of each other, and respect for national laws and international commitments. The second part of the MOU identifies the five areas of cooperation that are central to the BRI: policy coordination; facilities connectivity; unimpeded trade; financial integration; and people-to-people bond. Two further parts set out the modes of cooperation including high-level exchanges, information exchange and training, and cooperation mechanisms.
8 CELAC includes all 33 Latin American and Caribbean countries and was created in 2011 with the “commitment to advance the gradual process of regional integration and act as spokesman for the Community with other countries’ regional blocs” (Hogenboom et al., Citation2022).
9 United Nations Economic Commission for Latin America and the Caribbean (ECLAC), 2015.
10 For an analysis of BRI in LAC, see Rhys Jenkins (Citation2022).
11 Comprehensive Strategic Partnerships were formalized with Brazil in 2012 and Mexico in 2013.
12 U.S. President Donald Trump proposed USMCA during the G20 Summit in 2018, where it was signed by himself, Mexican President Enrique Peña Nieto, and Canadian Prime Minister Justin Trudeau. A revised version reflecting additional consultations was signed on December 10, 2019, and ratified by all three countries.
13 Following notification by all three governments that the provisions were ready for domestic implementation, the agreement came into effect on July 1, 2020.
14 Is sometimes characterized as “NAFTA 2.0”, or “New NAFTA”.
17 The list of differences between USMCA and NAFTA is listed on the website of the United States Trade Representative (USTR): “UNITED STATES–MEXICO–CANADA TRADE FACT SHEET Modernizing NAFTA into a 21st Century Trade Agreement”.
18 Mary E. Burfisher, Frederic Lambert & Troy D Matheson, NAFTA to USMCA: What is Gained?, IMF Working Paper, No. 19/73 (March 26, 2019).
20 According to data from the United States Trade Representative (Citation2020), most motor vehicle parts imports (59 percent) came from outside of North America in 2017, particularly China (15 percent of parts imports), Japan (11 percent), Germany (8 percent), and South Korea (5 percent).
22 “Passenger vehicles and light trucks must meet an regional value content (RVC) requirement of 75 percent (vs. 62.5 percent in NAFTA). At least 70 percent of a producer’s steel and aluminum purchases must originate in North America and, at least 40 percent (for passenger vehicles) or 45 percent (for light trucks) of a vehicle producer’s production must be certified as meeting the labor value content (LVC) requirement where the average base hourly wage rate is at least $16 per hour”.
23 In 2020, however, China once again displaced Mexico as the main trading partner of the United States. The primary reason has been attributed to the lack of dynamism in bilateral trade between the US and Mexico in the context of the COVID-19 pandemic.