In recent years, Foreign Direct Investment (FDI) from China in Mexico has sparked a debate filled with misconceptions, particularly in the United States and Canada. Narratives positioning Mexico as a "springboard" for Chinese products have proliferated, fueling unfounded geopolitical concerns.
Marcelo Ebrard, Secretary of Economy, highlighted that Mexico’s share of Chinese FDI in North America is minimal: between 2016 and 2023, only 0.4% reached Mexico, compared to 68.1% captured by the United States and 31.5% by Canada*.
In fact, a study by the S&P 500 concluded that of the 90 investments made by mainland China-affiliated automotive companies in Mexico between 2019 and 2024, 23% of them are Tesla suppliers.
"About one-third of Prodensa's Chinese clients operate in the automotive manufacturing sector in Mexico. The interesting thing is that most of these clients were driven, not by a desire to exploit USMCA provisions, but as a response to specific requests and requirements from their clients."
“It's important to see the side of the Chinese manufacturer, many of which are required to be in Mexico by their clients.” - Marco Kuljacha, President
"The truth is that many of them are not all that excited about operating here, but are driven by commitments. It's important to see that side of it, that many of these investments are aiming to better serve the North American market and integrate into supply chains, rather than this laser focus on circumventing trade regulations." - Marco Kuljacha
And investment has not been the only cause for public concern in recent years. Imports of Chinese products, especially electric vehicles, has the three countries publicly disputing the figures. As Luis Rosendo Gutierrez, Mexico’s Undersecretary of Foreign Trade, pointed out, “70% of Mexico’s imports from China are done not by Mexican companies but by U.S. and foreign firms”. Actually, the Chinese imports are facilitated by about 50 foreign companies operating within Mexico, primarily in the automotive, semiconductor, and aerospace sectors. Notably, half of these firms are U.S.-based.
"The relationship between Mexico and China has gained strategic relevance in recent years, generating a significant impact on the dynamics of the USMCA. On the one hand, the growing presence of investment and trade with China represents an opportunity to diversify markets and strengthen sectors such as manufacturing and technology in Mexico. However, this relationship also poses challenges within the framework of the USMCA, especially due to trade tensions between the United States and China, which could lead to pressures to limit certain alliances or investments." - Monica Lugo
"In this context, Mexico must balance its collaboration with both partners to maximize economic benefits and maintain its competitiveness in the North American region, without compromising its commitments in the trilateral agreement." - Monica Lugo, Director of Institutional Relations at Prodensa
Data from the past 20 years clearly demonstrates the disparity in the distribution of Chinese FDI among the three USMCA countries. Since 2002, the United States has attracted over $269 billion in Chinese investments, an impressive figure compared to Canada’s $124.6 billion and Mexico’s modest $1.68 billion during the same period.
These figures reveal that China’s presence in the Mexican economy is insignificant.
In Mexico, Chinese FDI shows an irregular trend. For example, while 2014 saw a 1692.4% increase compared to the previous year, this growth did not continue in subsequent years.
In fact, the most recent figures from 2023 reveal a 72% drop compared to the previous year, confirming that there is no consistent flow of Chinese investment into Mexico.
Graph 1, comparing investment trends across the three countries, clearly illustrates Mexico’s marginal role compared to its neighbors. While the United States shows sustained growth up to 2019 and Canada maintains a stable trend since 2016, Mexico appears as an secondary player in attracting Chinese capital.
These figures reinforce the idea that Mexico does not pose an economic or geopolitical risk in this context.
The distribution of Chinese FDI in North America is heavily influenced by each country’s economic characteristics and priorities:
In this regard, Marcelo Ebrard emphasized that the narrative framing Mexico as a geopolitical risk is unfounded. According to him, this perception stems more from the U.S. and Canada’s interest in protecting their market share in the region than from a reality based on data.
“There has been more coordination between the governments of Canada, the U.S., and Mexico on their intention of de-risking from China. We have seen all three countries put tariffs on goods like EVs coming from Asia, specifically China. I think this is just the beginning, and will surely be the focus at the beginning of the coming year.
"The opportunity lies in de-risking from China and developing electronics supply chains locally, but this will take strategic coordination in the region, especially between the U.S. and Mexico." - Emilio Cadena, CEO
The three countries are realizing very quickly that the import maps from Asia are almost exactly the same - about 50% of the imports from Asia are electrical products, either consumer goods or parts and components. That is where the opportunity lies - how to develop those supply chains in the region, and in coordination of all three countries. The whole region is going to have to be strategic on how to de-risk from China without losing the supply chains of critical goods that come from Asia that are just much more competitive than what exists in the region. This needs to be at the forefront of the discussion leading up to the USMCA review in 2026." - Emilio Cadena
Despite alarmist narratives, the data shows that Chinese FDI in Mexico is minimal compared to its USMCA partners. This analysis highlights four key points:
*Note - It is widely suspected that the figures by Secretary Ebrard underrepresent Chinese investments made by their global affiliates, yet the percentage in Mexico is still low.