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Engagement between China and Latin America has significantly deepened in recent years. Chinese exports to Latin America have increased, while China has begun to invest in Latin American enterprises. However, many questions still remain about the sustainability of this relationship, especially in the case of Mexico, where many barriers to trade and investment still exist. Carnegie–Tsinghua’s Matt Ferchen hosted a panel featuring Enrique Dussel Peters, an economist and professor at Universidad Nacional Autónoma de México, and a number of Chinese and Latin American experts. They discussed the evolving ties between China and Latin America with a focus on the China-Mexico bilateral relationship.
Discussion Highlights
- Upswing in China-Mexico Relations: In the last several years, Mexican President Enrique Peña Nieto and Chinese President Xi Jinping have signed a number of agreements on development and exchange, panelists said. The two leaders will meet once again in November 2014. However, panelists did note the lack of high-level meetings in Mexico prior to these presidential meetings and added that Mexico needs to prepare thoroughly and establish concrete goals in order to truly deepen the bilateral relationship.
- Trade Imbalance: Latin America currently has a large trade deficit with China. While China exports many manufactured goods to the region, panelists explained that Latin America only exports low-value-added goods such as minerals and soy beans to China. This is reflected in China’s foreign direct investment as almost all of it goes to raw materials. Panelists noted that this model is unsustainable in the long-term for Latin America. Countries in the region must seek to attract Chinese investment in other sectors in order to create more sustainable economic relationship.
- Unfriendly Investment Environment: Panelists discussed the example of Dragon Mart. This business venture, which Chinese investors have a significant stake in, demonstrates anti-Chinese sentiment in Mexico. The government had complained of Dragon Mart’s negative impact on the environment while showing more lenience toward Mexican companies. They added that if Mexico does not address this issue, it will not be able to attract further Chinese foreign direct investment.
- Unclear Interests: Panelists agreed that Mexico and many Latin American countries do not have strong institutions or actors that focus solely on China. The lack of focus on China in academia and the public and private sectors means that many Latin American countries cannot effectively engage China or attract Chinese investment. Panelists noted that neither China nor Latin America truly knows what the other side wants in the relationship.
- Recommendations: Panelists agreed that Latin American countries must move beyond general discussions and work on conceptualizing long-term concrete projects to strengthen economic cooperation with China. The current trade imbalance benefits China. So the responsibility is on Latin American countries to be clear about their interests. If Latin America does not work to alter the status quo, discussants said, there will be no progress in its trade relations with China.
