The Strategist

Chinese business to take over America's position in Mexico

04/05/2017 - 14:25

Chinese business has set sights on a possibility of building plants in Mexico. Chinese companies decided to consider this prospect after US President Donald Trump threatened to impose a high tax on cars exported from Mexico, Reuters reports.

As a result, automotive companies Fiat and General Motor, aimed at the US market, announced their decision to stop developing production facilities in Mexico. According to the media, the Mexican states of Nuevo León and San Luis Potosi has already suffered.

Yet, nature abhors a vacuum. Chinese automobile company The Great Wall Motor is now pondering a possibility of building a plant in these states. Senior officials of the company have already met representatives of Mexican railway company Ferrocarril Mexicano and transport company Kansas City Southern de Mexico, the agency adds.

It is reported that construction of the Great Wall plant can begin next year and will cost about $ 500 million. The plant will be able to produce 250 thousand cars for the Mexican and American market.

After the US withdraws from the TTP, China may take its place as the leading trading country in the Asia-Pacific region. The Asian giant seeks to conclude an alternative international trade transaction - a comprehensive regional economic partnership.

China and South Korea is going to hold talks with the countries that were expected to participate in the Trans-Pacific Trade Partnership (TTP), from which the United States has previously withdrawn. Experts interviewed by CNBC suggested that the prospect of China joining the TTP, or conclusion of an alternative deal without the US, may allow Beijing to become the dominant player in the trading space of the Asia-Pacific region (APR).

Currently, South Korea and China are not included the TTP, but they have already advocated integration of trade relations in the Asia-Pacific region during two-day talks, which started in Chile on March 14. More precisely, they discussed reorganization of the TTP without US participation, as well as other trade agreements.

China earlier said that its participation in the talks in Chile is connected with its desire to discuss economic cooperation in the APR. At that, the country specified that it is not about potential joining the TTP, as follows from statement of the Chinese Foreign Ministry. Beijing has never openly expressed a desire to join the negotiations on the TTP, considering the deal too complicated.

Despite this, Beijing wants to strengthen trade relations with the TTP countries, the more so seeing the vacuum that emerged as a result of the US withdrawal. After that, China began to actively position itself as a global leader in free trade. Beijing also spoke in favor of concluding an alternative trade agreement, a kind of opposition to the TTP.

Earlier, Mexican Foreign Minister Luis Videgaray said that his country would strive to further strengthen the strategic partnership with China.

"From Mexico’s point of view, China is a very important trading partner, a country with which we have an integrated strategic association, and the relations between Mexico and the PRC will be strengthening and will become more important," Excelsior portal quoted Videgaray's statement in Chile.