China, Mexico Try to Ease Trade Ties
MEXICO CITY — Chinese President Hu Jintao pledged Monday to crack down on contraband Chinese merchandise coming into Mexico, whose ballooning trade deficit with the Asian nation has become a source of irritation here.
Hu, who met with Mexican President Vicente Fox in Mexico's capital as part of a 10-day diplomatic swing through North America, is hoping to reduce trade friction between the exporting powerhouses. The two leaders signed accords to boost trade in fruit and lower some export taxes, and they discussed establishing direct flights between China and Mexico to encourage tourism and business travel.
Fox said that Mexico would open up a new consular office in Guangzhou province, one of China's most important manufacturing centers, and China would put a cultural center in the Mexican capital.
"This reflects the will to take the bilateral relationship to a new level," Fox said.
China has been aggressively courting Latin American nations to feed its growing economy. It is lavishing billions in new investment in the region to obtain petroleum, copper and agricultural products.
But many in Mexico still view China as a threat rather than an opportunity.
Mexico's constitution puts strict limits on foreign investment in its state-owned oil sector, shutting Mexico out of the Chinese energy deals that have flowed to nations such as Venezuela and Brazil. Migration of low-wage industries -- such as apparel and electronics -- to China has cost Mexico tens of thousands of factory jobs in recent years.
China has displaced Mexico as the second-largest supplier of goods imported by the United States. China is even turning up the heat on Mexican chili growers, who say an increasing share of the spice indispensable to the Mexican kitchen is now imported from China.
"Their prices are below our cost of production," said Octavio Pozo, spokesman for Mexico's National Council of Chili Producers. "We're worried."
He isn't alone. China's exports to Mexico jumped by more than 50% last year as Mexicans snatched up $14.3 billion of Chinese-made apparel, toys and appliances. Mexico in turn sold less than $1 billion of goods to China in 2004, a figure that barely budged from 2003.
Cheap Chinese goods have been a bonanza for Mexican consumers. But domestic manufacturing industries such as footwear and apparel claim that some of that merchandise is smuggled into the country or brought in with fraudulent customs forms to avoid Mexican duties and quotas.
