Chinese investments in Mexico, widely seen as a convenient detour to avoid U.S.-imposed tariffs, could be six times the amount reflected in official data, it was announced Thursday. Estimates were made by a risk consulting firm in a report.
Washington-based Rhodium Group has completed more than 700 foreign direct investment transactions from China to Latin American countries, with a cumulative value of US$13 billion. If both figures are accurate, they would obscure the official tally of the total investment stock, i.e. the cumulative level of direct investment.
Chinese investment is mainly in the form of factories producing cars, electronics and consumer goods. Many companies are using the U.S. land border with Mexico to transport products, avoiding tariffs imposed by former U.S. President Donald Trump on direct shipments from China as part of a broader trade war. .
“Although a relatively small proportion of total foreign investment, Chinese direct investment in Mexico is significantly higher than shown in official statistics,” Rhodium Group said in its China Cross-Border Monitor report. .
“While some Chinese companies are eyeing the local Mexican market, overall investment appetite will be determined by market access to the United States.”
Newly announced investments from China have averaged 13 large deals per year since 2015, with an average total annual value of US$1 billion by 2020, the report’s authors said. . Automotive investment is expected to account for three-quarters of total investment in 2023, with parts manufacturers being a particularly substantial source of growth.
