Why Chinese companies are flocking to Mexico
Chinese investments have been pouring into Mexico lately. Last month alone brought two notable ones. The government of Nuevo León, a northern state bordering the United States, announced that China’s Lingong Machinery Group, which makes diggers and other construction equipment, would build a factory that it estimates will generate bn dollars in investment. The same day Trina Solar, a solar-panel manufacturer, said it would invest up to $1bn in the state. Both companies and their corporate compatriots can now find a home away from home at Hofusan, a Chinese-Mexican industrial park in Nuevo León.
Chinese companies’ heightened interest in Mexico dates to 2018 when Donald Trump, America’s president at the time, launched a trade war that included raising tariffs on imports from China. His successor, Joe Biden, has kept the tariffs in place. Mr Biden’s own America-first policies, such as the Inflation Reduction Act, are encouraging companies to consider “nearshoring” in North America, in large part to thwart China. The pandemic and the snarl-ups in supply chains it caused also pushed manufacturers to move closer to the American market. And setting up in Mexico has begun to look cheaper, as wages and other costs in China rise.
Mexico has tried to lure Chinese money before. The Mexico-China Chamber of Commerce and Technology organised events in 2008 to encourage the flow of capital but they were unsuccessful, says the chamber’s César Fragoz; back then China had no need to use Mexico as a way into America, which had yet to turn its back on Chinese companies. “The irony is that the first to react positively to an explicit policy against China are Chinese firms,” says Enrique Dussel Peters of the Centre for Chinese-Mexican Studies at UNAM, a university in Mexico City.
2023-11-23 10:08:13
Original from www.economist.com
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