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China Drawn to Mexico's Economy & Emerging Energy Sector

12 June, 2013

With Chinese President Xi Jinping’s visit to Mexico in early June,investors worldwide are watching closely as talks center around opening up Mexico’s highly regulated energy market and the emerging Latin American superpower’s booming economy as a whole.

“Access to strategic raw materials is key to understanding the dynamic of relations with China,” said Hugo Beteta,director for Mexico and Central America of the United Nations Economic Commission for Latin America and the Caribbean,according to ABC News. “Clearly there is an interest by China in Mexican oil.”

In fact,the International Monetary Fund (IMF) has reported that China’s trade with Mexico has tripled over the last six and a half years,a trend that current President Enrique Peña Nieto is determined to continue.

“The two new presidents reportedly hit it off on a personal level when Peña Nieto visited China and met with Xi in April,” writes ABC. “That resulted in an unusually    quick diplomatic follow-up,just two months into Xi’s presidency.”

Xi has repeatedly indicated that he is willing to work with Mexico to increase exports to China,some of which will undoubtedly be in the form of raw materials. According to Mexico’s Vice Minister of Foreign Relations,Carlos de Icaza,the two countries are planning to sign at least 12 agreements during Xi’s current visit,including partnerships in the fields of energy,science,technology,tourism and trade.

“Mexican exports to China came to a bit over $5.7 billion in 2012,” writes ABC. “Cell phones,video games and parts for electronics factories have been pouring into Mexico,which sends China minerals such as copper and lead.”

In addition,China imports more than 75 percent of the oil it consumes,which makes energy one of the hottest topics of discussion for Xi and Peña Nieto. Mexico’s state oil company has already taken minor steps towards furthering its relationship with China upon signing its first long-term contract with a Chinese company earlier this year.

Finally,the Chinese are also investing heavily in Mexico real estate,via the new Cancun Dragon Mart,which will be the largest commercial center to sell Chinese goods anywhere in the Americas. When finished,the complex will be worth billions and will encompass more than 1,300 acres,including 3,040 exhibition spaces,1000 vendors and more than 700 residents.