11.04.2018 Author: Dmitry Bokarev

Trump’s Mexico Policy Plays Right into Beijing’s Hands


In recent decades, China has gradually driven the USA out of Asia and has begun occupying the leading economic and political role in this region. However, the PRC’s activity is not limited to Asia. The Chinese presence is being felt more and more on the North American continent.

One of the PRC’s important partners in North America is the United Mexican States (UMS). Chinese-Mexican relations have a long history, beginning as early as the sixteenth century, when the Spanish colonialists began to develop the Sea Silk Road from China to Mexico via the Philippines.

Diplomatic relations between the current UMS and PRC were established in 1972. Since then, fruitful cooperation between the two states has developed gradually, and in 2003 they announced a strategic partnership. After that, Chinese-Mexican relations began to develop even more successfully.

In 2013, China announced its plan to create a global transport system conducive to international economic integration, called the One Belt One Road (OBOR) initiative. Participation in the OBOR offers partner countries of the PRC not only improved transport communication and trade growth (primarily with China), but also large Chinese investments. It was initially thought that the project would only cover the territory of Eurasia, but in fact no limitations were set. Soon, the OBOR began a successful march across Africa, and now Beijing is actively involving Latin America in the project, including Mexico. According to representatives of the PRC, Mexico has a key role to play in the OBOR.

Up to now, the USA has remained Mexico’s main economic power. However, the policies of American President Donald Trump, elected in November 2016, seem to be aimed specifically at pushing Mexico and other countries away from the USA and into the PRC’s embrace. This includes various measures aimed at tightening enforcement of immigration law, as well as Trump’s plan for the USA’s exit from the North American Free Trade Agreement, through which a number of goods from the UMS are imported duty-free into the USA.

Another new step taken by US leadership has been introducing obstacles to cooperation between American and Mexican companies. In January 2017, D. Trump said that he would seek the introduction of a border tax for the largest US automotive company, General Motors, which produces cars in Mexico and then imports them for sale in the USA. The president demanded that General Motors make a choice: to pay the tax or to transfer production back to America. The same pressure was exerted on other major American automakers, such as Ford and Toyota. According to D. Trump, the import tax on cars imported from the UMS and reach up to 35 percent. As a result, Ford abandoned its plans to build a plant in Mexico.

The leadership of General Motors has said that it will not transfer existing production from Mexico, as too much has already been invested into it. However, the company also had to abandon plans to construct a new plant in the UMS.

The measures taken by the US government were met with discontent by the people of Mexico, who lost a slew of jobs. Against the background of this behavior from Washington, Beijing, with its large-scale projects and generous investments, looks especially attractive to the UMS.

As one would expect, China immediately took advantage of the situation and hastened to replace American companies in these vacant niches of the Mexican market.  So in April 2017, it came to light that Chinese automaker, The Great Wall Motor, intends to build a plant in Mexico worth $500 million and capable of producing 250 thousand card per year. Construction should already begin in 2018.

The auto company situation could be a vivid illustration of the future development of the relationships between the USA, Mexico, and the PRC. According to some Mexican experts, despite the traditionally strong relationship between the UMS and the USA, China will soon become Mexico’s main partner.

The annual summit of the BRICS economic block (Brazil, Russia, India, China, and South Africa) took place in Xiamen (PRC) in September 2017. Representatives from other countries, including Mexican President Enrique Peña Nieto, were invited to the event on the initiative of China, the presiding nation. On the margins of the summit, the Mexican leader had a meeting with the leader of the People’s Republic of China, Xi Jinping, during which important agreements were reached concerning Chinese-Mexican cooperation on the OBOR project and other issues. It is possible that in the near future, Mexico will enter the expanded version of BRICS, “BRICS+”, which will strengthen its economic cooperation with all the states of the block, including the PRC.

Another platform upon which Chinese-Mexican cooperation is developing is the China-CELAC Forum, which began work in January 2015 (CELAC – the Commonwealth of Latin American and Caribbean States). The event is similar to the China-Africa forum. As in the case of Africa, the PRC intends to immediately extend its influence to all Latin American states, and therefore negotiates in this format.

In January 2018, the second ministerial meeting of the China-CELAC Forum was held in Santiago, Chile, at which Minister of Foreign Affairs of the People’s Republic of China Wang Yi met with his Mexican counterpart, Luis Videgaray Kaso. The ministers discussed the current state of Chinese-Mexican relations and their immediate prospects. Wang Yi once again noted the great importance of Mexico for the OBOR project and expressed gratitude to the UMS government for its support. He also said that strengthening cooperation between China and Mexico will contribute to peaceful development of the region and the whole planet.

The strengthening of relations between the PRC and the UMS and other states of the Western Hemisphere can indeed have consequences on a world-wide scale.  One of them may be the narrowing of the USA’s zone of influence to its own territory. As strange as it seems, due to the actions of the current American leadership, one can think that this is the result they are aiming for.

Dmitry Bokarev, political observer, exclusively for the online magazine “New Eastern Outlook.