Background

The relationship between Mexico and China stretches back centuries. Economic exchanges began as early as the sixteenth century, when the Manila galleon trade created one of the first truly global commercial circuits. In 1573, the first two Spanish galleons loaded with Chinese goods, including silk, porcelain, and other luxury products, arrived in Acapulco from Manila. This maritime route linked the Chinese ports in Fujian and Guangdong to the Americas via the Spanish colonial outpost in the Philippines. One of the most significant elements of this exchange was the flow of silver. The so-called Spanish dollars—high-purity silver coins—became a preferred currency in China. Many of these coins were minted in Mexico from silver extracted in regions such as Zacatecas and Guanajuato. Their consistent weight and quality meant that, even after Mexican independence in 1821 and Spain’s subsequent loss of the Philippines in 1898, Mexican silver dollars continued to play a crucial role in China’s monetary system.

Diplomatic relations were formally established in December 1899, when imperial China and Mexico signed the Treaty of Amity, Commerce, and Navigation. This agreement laid the foundations for official ties and facilitated migration flows that would have a lasting impact on Mexican society. Chinese migrants contributed significantly to sectors such as agriculture, mining, and railway construction. In some areas—notably, Mexicali in Baja California—Chinese communities were instrumental in shaping local economies and, over time, became an integral part of the regional identity.

After a long period marked by political turbulence in China and shifting global alliances, a new phase in the bilateral relationship emerged in the twentieth century. In 1971, Mexico recognised the People’s Republic of China (PRC) as the sole legitimate representative of China at the United Nations, aligning with a broader international movement that led to the PRC’s admission to that body. Diplomatic relations between Mexico and the PRC were formally established in 1972. This renewed engagement was consolidated in 1973, when Mexican President Luis Echeverría (in office 1970–76) became the first Mexican head of state to officially visit China.

In more recent times, the relationship has been consolidated through different mechanisms and strengthening economic ties. First, the bilateral relationship was designated a ‘Strategic Partnership’ in 2003 and elevated to a ‘Comprehensive Strategic Partnership’ in 2013. Significant efforts to address bilateral issues are evident in the establishment of institutions such as the Permanent Binational Commission (2004), the High-Level Group (GAN, in 2004), the High-Level Group in Business (GANE, 2013), and the High-Level Group in Investments (GANI, 2014) (acronyms in Spanish). These bilateral institutions complement regional efforts such as the Community of Latin American and Caribbean States (CELAC)–China Forum, launched in 2015, of which Mexico held the pro tempore presidency in 2021 and 2022.

While this rich institutional fabric demonstrates a commitment to formal dialogue, it is important to highlight that these institutions have struggled to consistently monitor and, more importantly, evaluate their periodic meetings over the past two decades. As a result, they have been largely ineffective in addressing and resolving bilateral issues such as the recognition of China as a market economy in the framework of the World Trade Organization (WTO) since 2001, or China’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in September 2021 (for more detail, see the last section on Key Controversies).

As of the end of 2024, Mexico had not developed a comprehensive strategic agenda across the multiple dimensions of its bilateral relationship with China, despite China’s massive socioeconomic presence in Mexico. On top of the institutional weaknesses outlined above, public, private, academic, and other Mexican institutions specialising in China remain generally weak. With few exceptions, they fail to produce periodic analyses, assessments, or actionable proposals. As a result, these domestic institutions’ capacity to advocate for a coherent national strategy on China in the public and legislative spheres has so far been limited.

In more recent times, the relationship has been marked by the escalation of US–China confrontation. Such confrontation reached new levels in 2017 under the first Trump administration, which framed the relationship as a great-power competition and initiated a trade war in 2018. The Biden administration adopted a strategy of ‘invest, compete, align’ in 2021, escalating it in 2022 under the concept of ‘security-shoring’, where all aspects of the US–China relationship were subordinated to US national security priorities. As part of the ‘align’ aspect of this strategy, third regions and countries, and particularly Mexico, were urged to participate in the US strategy against China. Since then, US pressure on Mexico has been formidable and is expected to further intensify under the second Trump administration (see below).

In this geopolitical context, Mexico faces a profound dilemma. The United States remains Mexico’s primary point of reference—not only due to socioeconomic ties, but also because of shared history, culture, and regional and multilateral policies. However, the Mexico–China relationship has also grown more complex, deep, expansive, and mature. From a Mexican perspective, China cannot and should not be excluded, regardless of the dynamics of the US–China confrontation. This poses massive challenges for Mexican society and its public sector as they navigate the third decade of the twenty-first century.

BRI Status

At the time of writing in mid-2025, Mexico is a member of neither the Belt and Road Initiative (BRI) nor the Asian Infrastructure Investment Bank (AIIB). Three issues are relevant for understanding Mexico’s position on both. First, Mexico’s policymakers have yet to elaborate an explicit strategy vis-a-vis China, including discussing whether to join the BRI and AIIB. Second, in the context of an overall confrontation between the United States and China and understanding the profound socioeconomic relations between Mexico and the United States (see below), successive Mexican governments have avoided engaging in these Chinese initiatives, given potential repercussions on the relationship with the United States. Third, from a pragmatic perspective, Mexico has been able to achieve its goals with China (such as in trade, investment, and infrastructure projects, as discussed below) without being a member of the BRI or the AIIB. Joining them would not necessarily bring additional benefits to Mexico but could have negative repercussions on its strategic relationship with the United States.

Current Economic Relations

The following sections will examine the socioeconomic relationship between Mexico and China in the twenty-first century, drawing on the perspective of the Academic Network of Latin America and the Caribbean on China (Red ALC-China) that this relationship should be clearly differentiated across four dimensions: trade, financing, investment, and infrastructure projects.

Trade

This has been one of the most extensively analysed topics in the Mexico–China relationship. China has emerged as the most dynamic player in Mexico’s foreign trade in the twenty-first century, becoming its second-largest trading partner since 2003. Three aspects stand out in this area. First, the spectacular growth of Mexico’s trade with China, which rose from less than 1 per cent of Mexico’s total trade before 2000 to 10.43 per cent in 2023 (Figure 1). In contrast, Mexico’s trade with the United States as a percentage of its total trade fell drastically, from 81.03 per cent in 1999 to 62.58 per cent in 2023.

Second, Chinese exports to Mexico dominate bilateral trade, although China has also become Mexico’s third-largest export destination in the past decade. In 2023, Mexico’s import–export ratio with China was 11.4:1, reflecting a significant trade deficit on the Mexican side. Notably, firms based in Mexico have increasingly substituted US imports with Chinese imports since the early twenty-first century.

Third, Mexico’s foreign trade by technological level—specifically in medium and high-technology products—has undergone notable changes. Since 2014, Mexico’s high-tech exports to the United States have surpassed its imports, largely driven by intra-industry trade. However, this trend differs for trade with China, where the gap between imports and exports of high-tech goods has widened. Since 2002, more than 70 per cent of Mexican imports from China are high-tech, while only about 40 per cent of Mexican exports to China have been high-tech. These trade imbalances, while significant, are less pronounced for Mexico than for other Latin American and Caribbean (LAC) countries, such as Argentina, Brazil, and Chile.

Financing

Latin America and the Caribbean received more than 120 billion USD in financing from China between 2005 and 2023. These loans have been highly concentrated in a few countries, with Venezuela receiving 49.33 per cent of the total, Brazil 27 per cent, Ecuador 9.83 per cent, and Argentina 6.42 per cent. In contrast, financing to Mexico amounted to only 1 billion USD (or 0.9 per cent of the region’s total), playing a less significant role in the Mexico–China relationship. This financing—a single transaction in 2013, considering important shortcomings of the dataset—does not allow for a sectoral analysis or trend during 2005–23.

Investment

Significant methodological differences exist in how foreign direct investment (FDI) is recorded, both globally and in the Mexican case. These discrepancies have dramatic implications: according to Mexican official statistics, Chinese outward FDI (OFDI) to Mexico totalled 2.5 billion USD in accumulated FDI flows by 2023, making China Mexico’s eighteenth-largest foreign investor. In contrast, a more detailed study by Red ALC-China reports a much higher figure of 22.5 billion USD (nine times bigger than the official figure), ranking China as Mexico’s sixth-largest and rapidly growing investor.

Table 1: México Statistical Differences on Chinese OFDI (2000-2023)

Based on Red ALC-China’s analysis since 2017, with annual information through to 2023, Chinese OFDI presents at least four distinctive characteristics.

First, China’s OFDI to Mexico has grown significantly over the past decade, particularly during 2015–19 and 2020–23. This growth pre-dates the US–China conflict and the emphasis on security-shoring. However, Chinese OFDI has also shown considerable fluctuations, with a decline of 10 per cent in 2023, amounting to 2 billion USD. While the growth of Chinese OFDI in Mexico is notable, it is important to maintain perspective. During the most dynamic period (2015–23), Chinese OFDI became Mexico’s second-largest source of FDI after the United States, yet it accounted for only 6.51 per cent of Mexico’s total FDI—a relatively low figure when compared with the United States (40.98 per cent).

Second, Chinese OFDI to Mexico has also become an important source of employment, generating more than 222,000 jobs by 2023, with each investment transaction generating an average of 1,575 jobs. Equally relevant is the centrality of new (or greenfield) investments by Chinese firms in Mexico. Between 2000 and 2023, greenfield investments accounted for 55.32 per cent of Chinese OFDI—a figure that rose to 76.22 per cent during the 2020–23 period. This shift is particularly significant since Chinese firms have traditionally favoured mergers and acquisitions. After two decades of operating in Mexico, Chinese firms have adapted, increasingly opting for new investments that do not require joint ventures with Mexican or other foreign firms.

The third characteristic of Chinese OFDI in Mexico relates to the ownership of Chinese firms. Across Latin America and the Caribbean, 70.80 per cent of Chinese OFDI has been driven by the public sector, which includes not only state-owned enterprises (SOEs) but also other firms whose activities are significantly shaped by the crucial and leading role of the public sector (for example, the central government, provinces, counties, and cities). In Mexico, however, 76.71 per cent of Chinese OFDI has come from private firms. This trend is closely tied to the sectoral allocation of Chinese investments in Mexico, which differs from patterns seen elsewhere in the region.

In the Mexican case, Chinese OFDI in raw materials played a relatively minor role between 2000 and 2023, accounting for just 12.28 per cent of total Chinese OFDI. In contrast, manufacturing (70.63 per cent) and OFDI targeting the Mexican domestic market (15.54 per cent) were far more significant (Figure 2). These recent trends contribute to the broader discussion about China’s role in creating or strengthening core–periphery relationships and deepening extractivism. The available evidence reveals that, at least in the Mexican context, Chinese OFDI has not been a driving force of extractivism.

Infrastructure Projects

Chinese infrastructure projects have, surprisingly, been one of the least examined topics in the LAC–China relationship, particularly in the case of Mexico. Here, it is useful to distinguish between OFDI and infrastructure projects that are better understood as contractual services, where a supplier delivers a project for a client—typically following a bidding process, though sometimes awarded by direct appointment—and where ownership remains with the client. Infrastructure projects, regardless of the firm’s nationality, are critical due to their long-term implications for technology, financing, and postconstruction services. They also play a key role in advancing the ‘globalisation process with Chinese characteristics’—that is, since 2013, China has followed a global strategy under the umbrella of the BRI based on the ‘interconnectivity’ of infrastructure projects.

Infrastructure projects have also been significant since the Reform and Opening-Up period in China for its overall development, technological upgrading, and eradication of absolute poverty. Until 2018, Mexico had not realised a single Chinese infrastructure project, unlike most of Latin America and the Caribbean. However, between 2019 and 2024, China was involved in 36 infrastructure projects in Mexico, including the renovation of subway lines, public transportation systems, Wi-Fi networks, and one of the six segments of the Tren Maya intercity railway in Mexico’s southeast. These projects, totalling more than 8 billion USD, generated nearly 170,000 jobs. Since 2019, Mexico has become one of the leading host countries of infrastructure projects contracted to Chinese firms in Latin America and the Caribbean in terms of the number of projects—most of them Chinese-financed—alongside Argentina and Brazil.

Three key features stand out. First, the transportation sector dominated, accounting for 77.22 per cent of the total value of infrastructure projects contracted to Chinese firms in Mexico through 2023. Energy projects made up only 22.61 per cent, contrasting with the broader LAC trend, where energy accounted for 46.39 per cent of Chinese infrastructure between 2000 and 2023. Second, in Mexico, 69.37 per cent of the infrastructure projects managed by Chinese contractors was pursued by public firms (owned or controlled by central, provincial, city and/or municipal governments). This share is lower than the LAC average, where public firms were responsible for 89.25 per cent of Chinese infrastructure projects. Third, of the nine energy infrastructure projects contracted to Chinese firms in Mexico up to 2023, eight involved non–fossil fuel or renewable energy sources, representing 56.96 per cent of the total value of energy-related projects. This represents a substantial contribution that gives us insights into the nature of Chinese infrastructure projects in Latin America and the Caribbean and Mexico, revealing the surprising environmental and sustainable development footprints of these projects, which challenge the conventional view that China pays little attention to these issues.

Key Controversies

At least five important debates are taking place in Mexico regarding China.

First, the concept of ‘new triangular relationships’ is critical for Mexico in the 2020s and beyond. This framework suggests that third countries such as Mexico—and, more broadly, regions such as Latin America and the Caribbean—must pragmatically engage with both the United States and China. From a Mexican perspective, excluding either is neither realistic nor practical, considering the depth of the US and Chinese socioeconomic presence. However, this pragmatic approach has become increasingly challenging since 2022 and the United States’ ‘security-shoring’ policy. The Biden administration exerted explicit pressure on Mexico to avoid incorporating Chinese value-added components into exports destined for the US market. More recently, President Trump has intensified this stance, threatening Mexico with unilateral tariffs. It is true that US imports from Mexico—its largest trading partner as of 2023—have incorporated more Chinese value-added components over time, rising from virtually zero in 1995 to 7.5 per cent in 2020 (Figure 3). However, US value-added components in Mexican exports remain by far the most significant, albeit with a declining trend from 1995 to 2020. Additionally, about 70 per cent of Mexican imports are conducted by foreign transnational corporations, particularly US-headquartered firms. Consequently, US tariffs on ‘Mexican imports’ would directly impact these corporations, creating a backlash that affects US firms operating in Mexico.

Despite these economic realities, political arguments in Washington often reflect inadequate understanding of the deep North American integration process and have generated widespread uncertainty in Mexico. This uncertainty particularly affects the export-oriented sector, which comprises predominantly US, European, Japanese, and Asian firms. Given Trump’s campaign promises, it is likely that economic considerations will be secondary to political motivations in raising new tariffs. This approach could undermine the United States–Mexico–Canada Agreement (USMCA), negotiated and implemented during Trump’s first term.

Second, in addition to its aggressive security-shoring strategy, the United States’ push for disengagement from China has also involved opposition to Chinese investments. The United Sates expects Mexico to align its policies with US legislation against China—such as restrictions on Chinese investments—to continue enjoying the benefits of US trade and investment. At the same time, the Chinese presence in Mexico is substantial and multifaceted. It spans cultural, educational, and academic exchanges in addition to trade, OFDI, and infrastructure projects. This creates a challenging dilemma for Mexican authorities, business organisations, and academic sectors, as they must navigate competing pressures from their two most significant partners. This dynamic will likely remain a source of uncertainty in Mexico’s relationships with both the United States and China. While the United States remains Mexico’s primary cultural, political, and economic reference point, it is evident that US national security priorities do not always align with Mexico’s national interests or security goals.

Third, since 2018, Mexico’s political administrations have attempted to shift the country’s development path beyond neoliberalism. Presidents Andrés López Obrador (2018–24) and Claudia Sheinbaum Pardo (in office since October 2024) have explicitly pursued new social policies aimed at improving the welfare of Mexico’s historically marginalised populations. These include efforts to raise real minimum wages and enhance the overall wellbeing of excluded households. A key aspect of this agenda is the explicit goal of moving beyond an export-oriented industrialisation model by fostering greater integration of industrial processes in regions south of Mexico City.

Despite these intentions, it remains uncertain whether Chinese imports and investments have fundamentally altered Mexico’s industrial organisation patterns. For instance, Chinese imports have significantly substituted for US imports, with 83 per cent of Chinese imports in 2023 consisting of intermediate and capital goods. However, these imports largely follow the same logic of temporary imports to be exported (TIE). Under this system, TIE typically do not generate revenue through income taxes, value-added taxes, or tariffs. From this perspective, the increasing socioeconomic presence of China in Mexico raises important questions, including whether this presence can facilitate a meaningful shift in Mexico’s development path characterised by massive imports to be re-exported, which has remained largely unchanged since the late 1980s. It also remains a question whether it will contribute to the formation of a new industrial organisation model and help address Mexico’s longstanding fiscal challenges.

Fourth, as outlined earlier, Mexico had not yet defined a strategic agenda vis-a-vis China as of 2024, with notable exceptions in the academic sector. This lack of a cohesive strategy is concerning for Mexico, particularly given escalating US pressures under the security-shoring framework. Since the early twenty-first century, China has made several significant overtures to Mexico. These include a request for recognition as a market economy in the context of the WTO since 2001, proposals for a free-trade agreement or a trade association, an application for membership of the CPTPP—of which Mexico is a member—since 2021, and invitations to join initiatives such as the BRI and the AIIB, among several others. Mexico has yet to respond to any of these Chinese proposals. Looking forward, Mexico must engage in explicit discussions with China to address these and other critical bilateral issues. However, this should occur within the context of a ‘new triangular relationship’ that acknowledges and navigates the complexities of the US–China confrontation.

Fifth, the ongoing US–China confrontation, coupled with the security-shoring strategy since 2022, and Mexico’s internal weaknesses in addressing its bilateral relationship with China, has created fertile ground for the rise of anti-Chinese sentiment in Mexico. Without a cohesive national strategy to navigate its complex relations with China, Mexico risks adopting policies and attitudes that mirror the anti-Chinese stance seen in the United States. Since 2024, under mounting US pressure, Mexico’s public sector has emphasised import-substituting policies—focused specifically on reducing Chinese imports—for the first time since the 1970s. However, these efforts lack the necessary resources and broader vision to constitute a comprehensive industrial policy. In addition, prominent political figures have increasingly framed Mexico as an integral part of North America, reinforcing its alignment with the United States. This has been accompanied by actions such as the closures of allegedly illegal Chinese businesses in Mexico City. While legal, these measures are reminiscent of historical anti-Chinese movements in Mexico in the first two decades of the twentieth century, which culminated in several ethnic massacres of Chinese communities.

The combination of weak institutional capacity in Mexico’s public, private, and academic institutions to analyse and engage with China, insufficient understanding of the intricacies of the bilateral relationship, and intense pressure and blackmailing from the United States could easily catalyse anti-Chinese social movements. The pendulum is swinging sharply against China, largely driven by Mexican elites who lack a nuanced understanding of China and its relationship with Mexico. This failure to invest in building knowledge and capacity about China risks exacerbating tensions and undermining Mexico’s ability to navigate the relationship.

In conclusion, the potential for a robust China–Mexico strategic agenda is immense, both today and in the future. The relationship is not new; it has a long history and has evolved into a multifaceted and mature partnership since the establishment of diplomatic ties in 1972. The significance of this relationship extends far beyond economics, especially in the context of the ongoing US–China confrontation and the US security-shoring strategy. Mexico must confront the need for a national strategy in its relationship with China—one that takes full account of the existing four bilateral institutions, the many areas of dynamic cooperation, and the ongoing political debates in bilateral, regional, and multilateral arenas. These sectors include not only trade and investment but also tourism, culture, educational and academic exchanges, and the transfer of technology. Even in the case of Chinese investments and infrastructure projects in Mexico—and contrary to most of Latin America and the Caribbean—there have been no large scandals related to environmental and labour issues; this is also related to the sectoral specialisation of China’s presence in Mexico in investments and infrastructure projects and, as discussed, much less related to raw materials. Such recognition could also establish the basis for a robust long-term agenda.

Cover Photo: Ciudad de México. Source: Nan Palmero (CC), Wikimedia Commons.

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