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China to Invest Billions in Mexico Infrastructure, Strengthen Trade Ties

05 March, 2014

Chinese corporations will invest more than $500 billion in Latin America over the next five years, a move that will strengthen trade ties with Mexico and increase cooperation among entrepreneurs from both nations. This commitment represents a growing trend in Mexico-China partnerships, following record trade between the two nations. 

In fact, China has more than tripled the amount of exports it purchases annually from Mexico over the last decade. In recent years,China has purchased more than 2.3 percent of Mexico’s total exports, while the central bank reports that Mexico bought $57 billion worth of Chinese imports last year. China has also become Mexico’s third largest export market in recent years, with bilateral trade soaring to $62.7 billion last year, up from just $3.2 billion in 2000 and trailing behind only the U.S. and Canada.

“Chinese direct investment in Mexico totaled $280.7 million through September 2013,” writes Fox News. “That figure could rise to $600 million [for the same time period], if investments by overseas subsidiaries of Chinese companies are taken into account.”

In 2013 China invested $80 billion in Latin America, which equates to an impressive 13 percent of China’s total investments worldwide. This year, that number is expected to increase once again thanks to Mexico’s energy reforms and plans to improve and expand the nation’s infrastructure.

“Mexico requires large investments in infrastructure, such as oil platforms, trains, ports, bridges and highways,” Banco Interacciones managing director Fernando Moreno told the South China Morning Post. “Mexico has a large border with the U.S. There is going to be a lot of interest from Chinese companies in putting up factories to supply the U.S. market. This infrastructure can help.”

Banco Interacciones is the largest infrastructure-financing bank in Mexico and it is actively working to forge new deals with a variety of Chinese industrial companies. The North American Free Trade Agreement (NAFTA) is also a big reason Mexico is so attractive to businesses worldwide, since no tariffs are required on most goods that are transported between the U.S. and Mexico.

To date, more than 700 Chinese companies have already set up operations in Mexico, while the number of Mexican companies doing business in China is also on the rise and includes conglomerate Grupo Alfa, broadcaster Televisa and bakery magnate Grupo Bimbo. 

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Topics: Investment Infrastructure