China and Mexico : direct competitors in the world market

China and Mexico : direct competitors in the world market

Chinese dynamics in terms of growth and trade and Mexico serious
losing market shares and other problems

Alfredo Ascanio (askain)

The strategies of exportations of Mexico and China are similar from 1980. The commercial relation between these two countries indicates that they are two countries competitors in the world-wide market of goods.

Nevertheless other analysts say that their markets of exportation in the U.S market are different and they are not possible to be compared, as well as to specific sector (the yarn-textile-garment estimates-added chain).

The economic and trade relationship between both countries also has to do with the form in that these countries obtain his integration into the world market in the last two decades and his long-term strategies.

The lessons of the East Asian miracle combined with to earlier import-substituting industrialization regimes and the exporter-friendly environment was the best way to generate foreign direct investment. Specialization exports, in general, reflect efficiency.

For the establishment of to rent-seeking bureaucracy is one of the most significant obstacles development in a country like Mexico, said Anne Krueger.

NAFTA´s implementation by Mexico in 1994 is of the fundamental relevant for the liberalization strategy and the possibilities to place in the USA his commodities/products.

In until 2005 China the agricultural sector there are always been to politically and economically strategic sector because more of 60% of Chinese' s population lives in rural area. Also the country implemented reforms through “transitional institutions”.

To generate domestic markets and since the end of the 1970s, economic policies diminished the weight of state with new forms of property but with influence of the central government and the Chinese Communist Party and trough the state-owned banking for system and the massively domestic financing the private sector (150% of GDP at 2003).

The generation of employment is of critical importance in both countries (Mexico and China).

China will have to create between 10-13 million jobs annually in the economically active population but Mexico some 70% of the annual growth in economically active population found jobs in informal sector during 1991-2003. China’s GDP and income grew 8.2% but in Mexico only 0,5%.

The respective development strategies in China and Mexico reflect to pattern of increasing Energy consumption and CO2 emissions, with global effects.

In 2003, China’s exports accounted for 8,87% of the world exports, and 8,43% of the world imports, including Hong Kong, and most significant is the dynamism of this performance and the increasing process of Asian integration.

According to Chinese statistical sources, Mexico is a significant new market for Chinese trade in sectors such as electronics, auto parts, yarn-textile-garments and photographic goods, but also in raw materials (trade surplus of US$ 2,846 millions in 2004 with Mexico).

Mexico’s exports especially to the NAFTA-region (including Canada) have also shown an impressive performance, with an average annual growth rate of 10% during 1995-2004. But Mexico-China export-import relationship was 1:31. Mexico has a higher trade deficit with China.

China and Mexico' s trade structure is very similar and these two countries are direct competitors in the U.S. market with work-intensive products.

But Chinese is a country more dynamic in his exportations towards U.S. and Mexico begins to diminish in relation to exportations Chinese.

Mexico, Central America and the Dominican Republic will sees the main losers like result of Chinese' s entry into the WTO. These countries must integrate themselves with the MERCOSUR to diversify their economies of export and import.

(Este artículo es un resumen del trabajo de Enrique Dussel Peters en Globalternative,org.) Ver Global Issue No. 24.

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