Jose Rogelio Garza, undersecretary of industry and commerce of Mexico, discussed the investment environment in Mexico at the China-Mexico Industry Investment Cooperation Seminar during the sixth China Overseas Investment Fair Oct 24 in Beijing. Zhang Yuchen / China Daily

China’s increasing commerce with Mexico will not negatively affect the relationship between the United States and its southern neighbor, said an expert.

The interdependent relationship between the US and Mexico won’t be changed, and both still see China as a competitor, said Dr José Luis-Ugalde, senior scholar at the Universidad Nacional Autónoma de México (UNAM) and visiting professor at the Freie Universität in Berlin, Germany. Valdés-Ugalde letured in Renmin University of China in Beijing in September, about one and half months after Chinese President Xi Jinping’s visit to Latin America.

“But it is necessary for the Mexican economy to reach a trade balance,” Valdés –Ugalde said.

China exported $61.3 billion worth of goods to Mexico in 2013, while importing $6.5 billion.

The volume of Mexico’s exports to the US and Canada through the North American Free Trade Agreement (NAFTA ) reached $310 billion last year, 87 percent of which is to the US.

Under a new comprehensive strategic relationship, China and Mexico intend to increase cooperation in areas such as food, automobiles, energy, medicine and electronic devices.

“It is not necessarily invading the US zone,” said Valdés-Ugalde.

China wants to get closer to the US market and also gain political influence among the Caribbean countries. China also needs energy and mining products. Mexico has a trade deficit with China and is losing ground in the US market to the Chinese products.

During the first decade of the 2000s, China’s share of the US market rose from 6.22 percent in 2000 to 19.42 percent in 2009, while Mexico’s dropped slightly from 16.61 percent to 16.01 percent.

The Alix Partners Manufacturing cost index ranks Mexico as the best country for business costs, with a 25-percent cost advantage for the US, according to Jose Rogelio Garza, Mexico’s undersecretary of industry and commerce. Garza spoke at the China-Mexico Industry Investment Cooperation Seminar during the China Overseas Investment Fair on Oct 24 in Beijing.

According to professors Enrique Dussel and Kevin P. Gallagher, the US participation in the Mexican market declined as China’s increased. The same pattern was noted in the Mexican participation in the US market, mainly among 20 products.

Dussel is a professor at UNAM and runs the Center for China-Mexico Studies. Gallagher is professor of international relations at Boston University and co-directs the Global Economic Governance Initiative.

The share of China’s imports in Mexico’s markets increased from 1.09 percent in 2000 to 17.83 percent in 2009, while the US’ fell from 72 percent to 41.54 percent.

“It is still not clear what are the specific projects in which China and Mexico will cooperate,” said Valdés-Ugalde.

It is, however, expected that China will help Mexico develop transportation infrastructure, mainly in port cities, which will improve the transportation of products, the professor said.

By ZHANG YUCHEN October 27,2014 in China Daily