The Mexico Story.

Previously posted on my Facebook Page. 

MEXICO and the United States are not just border neighbors; they are connected by a sturdy umbilical cord that is emotionally cultural, significantly political, and beneficially economic. Forget that the United States gets its steady supply of cocaine, heroin, methamphetamine, and other illicit narcotics from Mexican drug cartels. That is simply the dramatic side-story. This high and low “friendship” is tight.

       History: The relationship evolved quite uneasily from two agreements: [1] When Mexico ceded the modern-day southwestern United States to the U.S. via the Treaty of Guadalupe Hidalgo at the end of Mexican-American War 1848, and [2] The Gadsden Purchase in 1854 when Washington agreed to pay Mexico $10 million for a portion of Mexico, which later became part of Arizona and New Mexico.

       And so since the late 19th century during the regime of President Porfirio Díaz (1876–1911), the two countries have fortified their ties. During Díaz's long presidency, U.S. businessmen acquired agricultural and mining interests in Mexico. Meantime, the U.S. played an important role in the course of the Mexican Revolution (1910–1920) with direct actions of the U.S. influencing the outcome. And so on and so forth.

       These days, the U.S. is Mexico's largest trading partner, accounting for close to half of all exports and more than half of all imports. For the U.S., Mexico is the 3rd largest trading partner after Canada and China. The two-way trade between both nations amounted to almost $600 billion. Of course, there’s the North American Free Trade Agreement (NAFTA) signed in 1994 with the goal of eliminating barriers to trade and investment.

       Mexico is also the United States’ 2nd top gross petroleum importer after Canada, and ahead of Saudi Arabia, Russia (pre-Ukraine war), and Colombia. With China showing signs of slowdown of business with the West and per obvious result of the current Ukraine drama, Washington’s trade relations with Beijing and Moscow are expected to plummet. It wouldn’t be surprising that the U.S./Mexico romance will even grow fonder. 🇲🇽🇲🇽🇲🇽

Mexico is not a poor country as gauged by its economy, which is the 9th largest economy in the world. Although GDP growth rate plummeted to 2.11 percent, it is a decent rise from 2020 pandemic’s -18.70 percent but far from the all-time high of 19.90 percent in the second quarter of 2021. The country’s 3.4 percent unemployment isn’t so bad either.

       Major problem is Mexico's wealth is unevenly distributed among its 128 million people where 10 percent of nation's wealthiest have 42.2 percent of all income and 10 percent of the nation's poorest have 1.3 of the remaining income. The nonstop trek of migrants off the U.S. southern border though, I believe, isn’t because of poverty per se. It is a combination of several factors although I am not discussing that subject right now.

       Anyways.

       Mexico’s main industries are food and beverages, tobacco, chemicals, iron and steel, petroleum, clothing, motor vehicles, consumer durables, and tourism. It is a major exporter of silver, fruits, vegetables, coffee, cotton, oil and oil products.

       True, Mexico is loyally American but it doesn’t mean, like it’s BFF the U.S., that it is not vulnerable to anything Chinese. In 2020 amidst the pandemic, Mexico's imports from China exceeded its exports by more than $65 billion. But this trade exchange, although still significantly less massive than with the U.S., is not without roots. 🇲🇽🇲🇽🇲🇽

China/Mexico links date back to the early days of the Spanish Colonial Empire in the Americas and the Philippines. In the 16th-17th century, people, goods, and news traveling between China and Spain usually did so through the Philippines (where there was a large Chinese settlement) and (via the Manila galleon trade) to Mexico. The first two galleons loaded with Chinese goods arrived from the Philippines to Acapulco in 1573.

       But Beijing/Mexico City trade relations are continually, basically a working project. American sanctions on China and tariffs on Chinese goods stunted the exchange, as well as rising wages in China and the difficulty of doing business there. The trend has accelerated recently. But the Chinese are not about to give up as exemplified by recent attempts.

       Same as it does in Latin America and Africa, China expands its FDIs in Mexico in recent years. China was set to construct a $200 million, 1,400-acre mega-mall, Dragon Mart, near the beach resort of Cancún. But it was shot down by environmentalists. In 2014, the Mexican government cancelled a contract for China to build a bullet train in Mexico.

       Yet it doesn’t mean Chinese companies are off-limits in Mexico. Several Chinese multinational companies operate in Mexico such as Hisense, Huawei, JAC Motors, Lenovo and ZTE. At the same time, several Mexican multinational companies operate in China such as Gruma, Grupo Bimbo, Nemak, and Softtek. 🇲🇽🇲🇽🇲🇽