Mexico finds itself in a very unique position having the interest of China and US competing for its favor. How this happened?
Interestingly, it is due to US strategy on Indo-Pacific region. As you might remember, US has decided to take China. Thus, allocating all military resources to Asia while developing new bilateral relations with the countries in Indo-Pacific region. Naturally, China will do something to balance such aggressive strategy. It starts with Mexico.
YOUTUBE
80% of the Mexico exports are coming from the trade with US> almost half of the foreign direct investment is also coming from US. That creates more populated area as well as developed region in the north compared to south of Mexico. The regional wealth is more prosper in the north.
Mexico is aware of its problems and heavily need to create jobs and sustain development fairly in all regions. Therefore, it has prioritized 4 projects. These are; new airport system, Mayan Train project on Yucatan Peninsula, oil refinery in Dos Bocas and sea passage projects on Istmus of Tehuantepec. These project create job and contribute to development.
However given the size and scale of the Projects, Mexico relies on private and foreign investment for their completion. The two leading partners are US and China.
China wants to create problems to US with Mexico by investing. If Mexico develops, it can rely less on US and would change its foreign policy. Naturally, US is concerned with Chinese investments which becomes a potential security threats. In order to eliminate Chinese threats, US trusts the clause of USMCA where it prohibits free trade agreements with non-market economies. In order to attract Mexico, US throws an aid package which would support southern Mexico’s infrastructure development. Mexico is in many ways important to US such as telecom, energy, rare earth resources, defense and automotive industry. Therefore, US cannot let Mexico be driven by China. All these things come to the point that US cannot risk Chinese control of all infrastructure in areas where these major projects take place.
Mexico is enjoying (for the moment) the situation. But there is one thing clear; Mexico is in position to secure better terms.
