Latin America/Caribbean and Asia/Pacific Economics and Business Association An initiative of the Inter-American Development Bank and the Asian Development Bank Institute Seventh LAEBA Annual Meeting Washington DC, USA – January 31st, 2012 Economic relations between Mexico and China Enrique Dussels Sponsored by Inter­American Development Bank Integration and Trade Sector Institute for the Integration of Latin American and the Caribbean (INTAL) ECONOMIC RELATIONS BETWEEN MEXICO AND CHINA CHINA. Conditions, Challenges and Expectations ENRIQUE DUSSEL PETERS G d t School Graduate S h l off E Economics, i UNAM Coordinator C t ffor Chi Center Chinese-Mexican M i Studies St di National Autonomous University of Mexico (UNAM) http://dusselpeters.com http://www.economia.unam.mx/cechimex “Taking Stock of the LAC-Asia Relationship”, IDB Washington, D.C., January 31st, 2012 TOPICS z Recent research in LAC on LAC-China z General context in China z Mexico-China Economic Relationship z Conclusions C l i and d Proposals P l RESEARCH IN LAC z Insufficient but increasing research: – Regional: ECLAC (since 2004), 2004) BID, BID (since 2004) + WB + – – – – – OECD, … Lall, Jenkins/Dussel Peters (several, including 2009), Gallagher/Porzecanski (2010), … Argentina: López and Ramos, Starobinsky, Moneta, Casarín, … several business organizations Brasil: Saslovsky/Rozemberg Saslovsky/Rozemberg, Barbosa/Guimaraes Barbosa/Guimaraes, Chami Batista, Castro (2011), Campinhas and USP, … CEBC México: De la Calle, Cornejo, Dussel Peters/Trapaga, Oropeza, … ITESM, Colmex, Cechimex/UNAM, .. Several business organizations Cuba Venezuela, Cuba, Venezuela Perú (PUC (PUC, UP) UP), Colombia Colombia, Chile Chile, … AND in China (CASS, CICIR, …) DEBATES IN LAC ON CHINA (1) Conceptual discussions: “Maonomics” + public sector vs. market-led development? Conceptual implications? Long-term national strategy vs. EOI + relevance for agricultural sector, FDI, SOEs, domestic market, higher value-added value added products, products “indigenous” indigenous innovation policies … strategies + evaluation + resources (and results) Significant positive effects on terms of trade (J ki /D (Jenkins/Dussel l Peters) P ) andd FDI (ECLAC 2011) Based on case studies: clear specialization in low valueadded raw materials (X) vis vis-à-vis à vis higher value value-added added manufactured imports (M) + effective “downgrading” in several cases (Argentina, Mexico, …) … unsustainable t i bl economic i andd technological t h l i l relation? l ti ? DEBATES IN LAC ON CHINA (2) Substantial statistical differences. But: important trade deficit for LAC … sustainability? Increasing FDI and trade relation, but institutional weaknesses in the region and binationally: public, private and academic sectors Regional and multilateral institutions on LAC-China? In CHINA: a. LAC is increasingly “fashionable”, b. awareness off its i economic, i FDI andd trade d importance, i c. White Paper (2008), regional and bilateral policies (FTAs, CA & Caribbean, …) BUT: “very” insufficient, for example: effects of China´s trade Chi t d andd FDI iin local l l andd regional i l terms, t new forms of IO, employment, supplier systems, environment…?? Domestic credit to private sector (as a percentage of GDP) (1960-2010) 250 200 150 Argentina Brasil Chile China OCDE América Latina y el Caribe México Estados Unidos 100 50 0 1960 1965 1970 1975 1980 1985 1990 1995 Source: own ellaboration based on WB (2012). (2012) 2000 2005 LAC: TRADE BALANCE BY SPECIFIC COUNTRIES (IN $1,000) (1989‐2010) 140 000 000 140,000,000 120,000,000 100,000,000 80,000,000 China EU25 United States World 60,000,000 40,000,000 20,000,000 0 ‐20,000,000 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 ‐40,000,000 ‐60,000,000 ‐80,000,000 Source: own ellabora on based on Comtrade (2011). CONDITIONS AND CHALLENGES FOR MEXICO´S SOCIOECONOMY DEBATES IN MEXICO ON CHINA (1) In general, tense diplomatic and political relationship, 2011, the worst since 1972 Crisis of manufacturing since 2000 Overall “comercialización” comercialización of relationship Tariff and antidumping policies (2001-2011) Weak existing bilateral institutions No high high-level level support of existing institutions No short-, medium- and long-term agenda on China ECONOMIC AND TRAD CONDITIONS BETWEEN MEXICO AND CHINA (2) Statistical differences Trade in the US Overall trade Disaggregated Di t d trade t d specialization i li ti Intraindustry trade What kind of imports? p Tariffs Chinese FDI ECONOMIC AND TRAD CONDITIONS BETWEEN MEXICO AND CHINA (3) Comparación de las importaciones de China con las importaciones de América Latina y el Caribe (2011) (millones de dólares) (algunos casos seleccionados) China: importaciones de ALC) (1) Mundo 1,289,134 ALC 91,105 Argentina 6,804 Bolivia 189 Brasil 38,099 Colombia 2,103 , Costa Rica 3,107 República Dominicana 131 Ecuador 507 8 El Salvador Mé i México 6 875 6,875 Perú 6,368 ALC: exportaciones a China (2) Mundo 663,515 China h 49,225 Argentina 5,799 Bolivia 208 Brasil 30,752 Colombia 1,966 , Costa Rica 269 República Dominicana 127 Ecuador 329 El Salvador 3 Mé i México 4 196 4,196 Perú 5,426 Fuente: elaboración propia con base en UN‐COMTRADE (2011). VARIACIÓN (2) / (1) ‐48.5 ‐46.0 ‐14.8 10.1 ‐19.3 ‐6.5 ‐91.3 ‐2.9 ‐35.2 ‐56.0 ‐39.0 39 0 ‐14.8 ECONOMIC AND TRAD CONDITIONS BETWEEN MEXICO AND CHINA Comparacion de las exportaciones de China con las importaciones de America Latina y el Caribe (2010) (algunos casos seleccionados) China: exportaciones a ALC (1) Mundo 1,577,764 ALC 91,248 Antigua y Barbuda 806 Argentina 6 116 6,116 Bolivia 173 Brasil 24,461 Colombia 3,820 688 Costa Rica Ecuador 1,496 El Salvador 365 Guatemala 1,018 Guyana 83 Jamaica 236 México 17,873 Panamá 11,967 Paraguay 1,051 Peru 3,550 , República Dominicana 904 ALC: importaciones de China (2) Mundo 1,508,710 China 104,208 Antigua y Barbuda Argentina Bolivia Brasil Colombia Costa Rica Ecuador El Salvador Guatemala Guyana Jamaica México Panamá Paraguay Peru República Dominicana VARIACIÓN (2) / (1) ‐4.4 114.2 42 7 649 7,649 533 25,536 5,477 991 1,607 483 984 85 243 45,608 4,173 3,433 5,115 , 5.2 125 1 125.1 308.1 104.4 143.4 144.0 107.4 132.2 96.6 101.4 103 1 103.1 255.2 34.9 326.8 144.1 1,616 178.7 Fuente: elaboración propia con base en UN‐COMTRADE (2011). MEXICO: SHARE OVER TOTAL TRADE 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 TOTAL UNITED STATES EUROPEAN UNION ASIA CHINA OTHER 100.00 100 00 100.00 100.00 100.00 100 00 100.00 100.00 100.00 100.00 100 00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 75.23 75 23 75.91 79.07 79.86 80 09 80.09 80.79 81.03 80.73 77 74 77.74 75.35 74.45 71.55 69.28 67.61 65.47 64.15 64.12 63.95 9.05 9 05 8.61 6.71 6.17 6 46 6.46 6.59 6.71 6.19 6 80 6.80 6.90 7.41 7.44 8.06 7.91 8.73 9.41 8.37 7.82 7.44 7 44 7.85 6.41 6.25 6 22 6.22 6.19 6.20 6.59 8 43 8.43 10.51 10.60 12.56 13.40 14.88 15.72 15.81 17.17 17.77 0.37 0 37 0.39 0.37 0.43 0 59 0.59 0.71 0.74 0.91 1 32 1.32 2.10 3.09 3.99 4.32 5.16 5.71 6.12 7.48 8.30 8.28 8 28 7.62 7.81 7.72 7 23 7.23 6.42 6.07 6.50 7 04 7.04 7.23 7.53 8.45 9.26 9.60 10.07 10.63 10.34 10.45 Source: own ellaboration based on Banxico (2011). UNITED STATES: SHARE OVER TOTAL IMPORTS (1991-2010) (share over total) 25.00 20.00 15.00 China Canadá 10.00 México Japan 5.00 0.00 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: own ellaboration based on USITC (2011). 2004 2005 2006 2007 2008 2009 2010 45.00 UNITED STATES: IMPORTS IN THE YTG CHAIN (1990‐2010) 40 00 40.00 35.00 30.00 25.00 20.00 China Vietnam Mé ico México India Indonesia Bangladesh Pakistan 15 00 15.00 10.00 5.00 0.00 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: own ellabora on based on USITC (2011). 2004 2005 2006 2007 2008 2009 2010 Mexico: Exports to China ($US million) 26 27 29 72 74 84 85 86 87 Total Ores,Slag,Ash Oil Organic Chemicals Iron And Steel Copper+Articles Thereof Machinery Electrical Machinery Railway;Trf Sign Eq Vehicles, Not Railway 1995 2000 2005 2006 2007 2008 2009 2010 1995-2010 37 0 0 4 0 0 1 0 0 0 204 0 0 3 4 0 157 19 0 5 1,136 101 0 104 102 146 296 39 0 52 1,688 133 1 139 28 429 403 84 0 199 1,895 287 1 135 51 361 363 186 0 212 2,047 477 0 95 51 487 143 291 0 181 2,216 553 0 94 109 408 124 269 0 209 4,198 1,028 724 180 15 619 198 301 1 641 13,421 2,580 728 754 360 2,451 1 685 1,685 1,188 1 1,499 100.00 0.00 0.00 1.31 1.81 0.12 77.24 9.29 0.07 0 0 2.28 100.00 8.94 0.00 9.19 8.97 12.89 26.03 3.40 0.00 0 00 4.54 100.00 7.88 0.06 8.21 1.68 25.43 23.89 5.00 0.00 0 00 11.81 100.00 15.17 0.05 7.14 2.67 19.04 19.13 9.82 0.00 0 00 11.18 100.00 23.31 0.00 4.63 2.49 23.80 6.99 14.21 0.00 0 00 8.83 100.00 24.96 0.00 4.22 4.93 18.42 5.60 12.13 0.00 0 00 9.45 100.00 24.49 17.24 4.29 0.36 14.75 4.72 7.16 0.02 0 0 15.26 100.00 19.23 5.42 5.61 2.68 18.27 12.56 8.86 0.01 0 0 11.17 Source: own ellaboration based on SICM/CECHIMEX (2010). 26 27 29 72 74 84 85 86 87 Total Ores,Slag,Ash Oil Organic Chemicals Iron And Steel Copper+Articles Thereof Machinery Electrical Machinery Railway;Trf a ay; S Sign g Eq q Vehicles, Not Railway 100.00 0.00 0.00 10.52 0.49 0.00 2.37 0.55 0.00 0 00 0.46 Source: own ellaboration based on SICM/CECHIMEX (2010). Mexico: imports from China (1995-2010) ($million) 27 39 84 85 87 90 94 95 96 T t l Total Combustibles Minerales, Aceites M Plástico Y Sus Manufacturas Reactores Nucleares, Calderas, M Máquinas, Aparatos Y Material Elé Vehículos Automóviles, Tractores, Instrumentos Y Aparatos De Óptic M bl Muebles; M bili i Medicoquirúrg Mobiliario M di iú Juguetes, Juegos Y Artículos Para Manufacturas Diversas 1995 2000 2005 2006 2007 2008 2009 521 40 26 38 140 2 20 11 68 5 2,880 2 880 92 101 415 904 39 114 61 204 24 17,696 17 696 129 511 4,567 7,110 336 414 286 625 131 24,438 24 438 111 629 5,655 10,608 488 927 398 1,067 153 29,747 29 747 130 737 6,104 12,914 654 1,530 492 2,099 161 34,754 34 754 152 882 6,704 15,497 786 1,690 551 2,189 176 32,529 32 529 103 776 7,199 15,361 537 1,279 410 1,610 141 Source: own ellaboration based on SICM-CECHIMEX (2010). 2010 45,608 45 608 134 1,023 10,658 21,755 824 2,066 549 1,353 202 1995-2010 188,172 188 172 1,609 5,905 52,021 98,066 4,274 9,203 3 463 3,463 11,241 1,325 Mexico: intraindustry trade (percentage over total) (1995-2009) China (fuente WTA) China (fuente CCS) 1995 0.01 0.01 1996 0.03 -1997 0.02 -1998 0.08 -1999 0 09 0.09 -2000 0.08 0.15 2001 0.11 0.24 2002 0.12 0.21 2003 0.07 -2004 0.05 0.19 2005 0.05 0.22 2006 0 06 0.06 0 21 0.21 2007 0.05 -2008 0.04 0.19 2009 0.04 0.19 1995-2000 0.09 0.13 2000-2009 0.06 0.21 Source: Cárdenas and Dussel Peters (2011). USA 0.44 0.45 0.47 0.48 0 47 0.47 0.47 0.46 0.46 0.45 0.44 0.43 0 42 0.42 0.42 0.41 0.40 0.47 0.45 México: Importaciones Totales por tipo de bien 2000‐2010 (porcentaje sobre el total) 2000 2005 2006 2007 2008 2009 2010 2000‐2010 100.00 13.83 9 57 9.57 75.72 0.38 0.50 100.00 11.82 14 21 14.21 72.94 0.46 0.57 100.00 11.92 14 41 14.41 72.50 0.45 0.72 100.00 12.25 15 21 15.21 71.79 0.43 0.32 100.00 13.00 15 39 15.39 71.08 0.39 0.14 100.00 13.07 14 01 14.01 72.08 0.47 0.37 100.00 10.03 13 74 13.74 75.93 0.23 0.07 100.00 12.19 13 60 13.60 73.47 0.41 0.33 IMPORTACIONES DE CHINA TOTAL 100 00 100.00 CAPITAL 16.65 CONSUMO 24.71 INTERMEDIOS 56.76 ENVASES 0.15 SIN DESCRIPCION 1.73 100.00 100 00 13.32 12.69 73.36 0.14 0.49 100.00 100 00 13.74 11.80 73.44 0.12 0.89 100.00 100 00 14.56 10.95 73.88 0.13 0.48 100.00 100 00 16.89 10.26 72.74 0.11 0.00 100.00 100 00 17.85 9.72 72.20 0.10 0.13 100.00 100 00 13.59 9.09 77.19 0.06 0.07 100.00 100 00 14.67 11.51 73.40 0.11 0.31 IMPORTACIONES TOTALES TOTAL CAPITAL CONSUMO INTERMEDIOS ENVASES SIN DESCRIPCION Fuente: elaboración propia con base en Secretaría de Economía (2011). CONCLUSIONS (1) z z z z z z z Until 2012: profound ignorance in LAC on China (both ways!) But,, still,, some results … Unsustainable economic and trade relationship (LAC/MxChina)? In Mexico Mexico, particularly difficult (but also as a result of deepest research?) In general, neither LAC nor Mexico, prepared for China Particularly the private and public sectors: institutional weaknesses Little information on effects of trade ((also imports!!), p ), FDI,, employment, p y , regional effects, disaggregated analysis, … z AND: NATIONAL AND REGIONAL AGENDA WITH CHINA? FUTURE COMMON PROJECTS? (LAC Australia, (LAC, A t li …)) (1) z z z z z z Beyond the discussion on “opportunity opportunity and threat”, threat , concrete analysis + projects Is LAC prepared for this “massive encounter” (trade, OFDI, labor, environment, …) Towards a “regional/LAC agenda with China” (public and private sectors sectors, academics academics, …)) Private sector? Business Summits (since 2006), sufficient? In LAC: beyond “big countries”, missing: Cuba, Centroamérica, Caribe, Perú, Ecuador, Bolivia, … Experiences with OFDI in LAC and effects: employment, environment, R&D, wages, … FUTURE COMMON PROJECTS? (LAC A (LAC, Australia, t li …)) (2) z z z z Effects Eff t off LAC LAC-China Chi on thi third d countries? t i ? US US, EU EU, Asia, Australia, … Concrete cooperation opportunities in the short, medium and long-term? Education, R&D, culture, tourism, … Needed: experiences and knowledge of OFDI in concrete value-addec chains + regions (soya in Salvador …)) Effects of China on: fiscal income, firms by level, … FUTURE COMMON PROJECTS? (LAC Australia (LAC, Australia, …)) (3) PRIVATE SECTOR: zPrepared for massive imports from China? See Mexico´s and LAC´s experience zLack of preparation: business plans, joint ventures, sum existing experiences of firms, … zAbility of “TOUGH” negotiations with China? Learning process? zCooperation and dialogue between business organizations in LAC + US + EU + Australia … zAbility of Mexico-Brasil to overcome regional competition and bilateral “animosities” animosities zLong-term harmonious only based on short-term harmony ECONOMIC RELATIONS BETWEEN MEXICO AND CHINA CHINA. Conditions, Challenges and Expectations ENRIQUE DUSSEL PETERS G d t School Graduate S h l off E Economics, i UNAM Coordinator C t ffor Chi Center Chinese-Mexican M i Studies St di National Autonomous University of Mexico (UNAM) http://dusselpeters.com http://www.economia.unam.mx/cechimex “Taking Stock of the LAC-Asia Relationship”, IDB Washington, D.C., January 31st, 2012