The trade relationship between Mexico and China has evolved significantly, positioning both countries as strategic partners in global trade. As the world becomes increasingly interconnected, trade relationships play a crucial role in economic dynamics, facilitating the exchange of goods and services.
Mexico-China Trade History: A Legacy of Commerce and Global Influence
Historical Milestones
Trade between Mexico and China dates back to the Manila Galleon, also known as the Nao de China, which connected Asia and the Americas through Acapulco in the 16th century. This exchange brought silk and porcelain to Mexico while exporting Mexican silver to China, strengthening local economies and fostering intercultural relations between the two regions.
In 1972, Mexico and the People's Republic of China established diplomatic relations, marking the beginning of a new era of political and economic collaboration. Since then, both countries have intensified their cooperation through bilateral agreements, such as the "Comprehensive Economic Cooperation Plan," and their participation in multilateral organizations like the World Trade Organization (WTO).
These efforts have expanded trade opportunities in sectors such as technology, mining, renewable energy, and shelter services in Mexico.
*Considered in the analysis are over 38 countries from Asia, including major trade partners such as China, Japan, South Korea, and India.
Key Trade Flows: Imports, Exports, and Market Trends
Imports from China
China is a leading supplier of electronic products, machinery, and vehicles to Mexico. In 2023, Chinese exports to Mexico reached $81.56 billion, with electronic equipment accounting for $22.33 billion. Additionally, sectors such as furniture, plastics, and chemicals have also experienced significant growth.
*Total imports from China (USD mn: Monthly: Mexico) refers to the total value of goods imported from China to Mexico, measured in millions of U.S. dollars, on a monthly basis.
Mexican Exports to China
On the other hand, Mexican exports to China, which include minerals such as copper and zinc, electronic equipment, and vehicles, totaled $18.74 billion in 2023. The agro-industrial sector also stands out, with products like avocados and pork gaining popularity in the Chinese market.
Source: Oxford Economics with data from the Chinese Ministry of Commerce
Key Industries Driving Bilateral Trade Growth
Manufacturing in Mexico, including the automotive industry, and renewable energy stand out as key areas where bilateral collaboration is growing.
Chinese foreign direct investment in infrastructure, such as industrial parks and solar power plants, is transforming regions like Nuevo León and Baja California into industrial hubs. (Also, over $1.5 million worth of goods cross the U.S.-Mexico border every minute, highlighting Mexico's strategic advantage for companies —like the Chinese ones— targeting the U.S. market!).
*The data in this chart represents announced investment transactions. It does not necessarily indicate whether the projects have been fully developed or if the funds have already been disbursed. If you want to see a comparative report with official data registered by the Mexican Ministry of Economy, click here.
Trade Outlook and Market Projections
Emerging Trends
Sectors such as e-commerce, artificial intelligence, and renewable energy are expected to drive bilateral growth. Companies like Alibaba and Huawei have already shown interest in expanding their operations in Mexico, leveraging its strategic location and skilled workforce.
Impact of the USMCA in 2026
The USMCA (T-MEC) review in 2026 could redefine China's role in Mexican supply chains. Possible scenarios include:
- Stricter Regulations: Tighter restrictions could limit Chinese participation, encouraging Mexican companies to diversify their trade partners.
- Termination of the USMCA: This could increase Mexico’s dependence on alternative markets, including China, potentially reinforcing China's economic influence in the region.
Proposals of the New Mexican Government
The new Mexican government has announced projects aimed at strengthening infrastructure and promoting industrial parks that support nearshoring. These initiatives could establish Mexico as a hub for nearshoring for Chinese companies looking to access the North American market. Examples include:
- The expansion of the Interoceanic Corridor
- The creation of free trade zones on the northern border
Source: Mexican Government Report
Trade Reforms
Proposals such as the creation of a foreign investment oversight mechanism could balance national security concerns with the economic benefits of Chinese investment. Additionally, tax incentives are being considered to attract more foreign capital in technological and energy sectors.
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Impact on National Security
The growth of Chinese investment has also raised concerns regarding national security, particularly in sectors such as telecommunications and mining (however, did you know that only 0.4% of Chinese FDI in North America went to Mexico (2016-2023), while the U.S. received 68.1% and Canada 31.5%?). Companies like Huawei and ZTE have been scrutinized for their potential ties to the Chinese government.
To mitigate risks, a system similar to the Committee on Foreign Investment in the United States (CFIUS) has been proposed, which would evaluate foreign investments in critical sectors.
Conclusions
The Mexico-China trade relationship demonstrates how stability and trade diversification can benefit both economies. Looking ahead, greater technological and sustainable sector integration will be driven by global market needs and supply chain shifts.
However, challenges such as geopolitical tensions and foreign investment transparency demands persist. Balancing economic cooperation with national interests is key for companies doing business in Mexico will be key to ensuring long-term mutual benefits.
Despite hurdles like the USMCA review and security concerns, strengthening ties with China can support Mexico’s North American strategy and unlock significant economic growth opportunities.
Key Points
- Historical Trade Ties: The Mexico-China trade relationship has deep roots dating back to the Manila Galleon and is now evolving into modern agreements that drive sectors such as technology, manufacturing, and renewable energy.
- Export Growth: China is a key partner for Mexico, not only as a supplier of electronic goods and machinery but also as a consumer of Mexican products, including minerals and agro-industrial goods.
- Geopolitical and Security Challenges: The growing Chinese investment in strategic sectors such as telecommunications and mining raises national security concerns, requiring stronger regulatory mechanisms.
- Impact of the USMCA: The treaty review in 2026 could significantly influence China’s role in Mexican supply chains, creating uncertainty but also opportunities.
- Future Collaboration: With a focus on technological innovation and sustainability, the Mexico-China trade relationship is expected to strengthen, provided a balance is maintained between economic cooperation and national interest protection.