Yesterday (May 11), Ecuador became the latest in a series of Latin American countries to sign a free trade agreement with China. Beijing has already signed deals with Chile, Peru and Costa Rica, and is negotiating future agreements with at least five other Latin American states, including Uruguay, Honduras and El Salvador.
China is Ecuador’s second largest trading partner as well as its largest bilateral creditor and a major investor and participant in its energy and infrastructure sectors.
Beijing has been Ecuador’s main source of external finance for over a decade
Ecuadour: “IMF? We don’t need no stinking IMF!”
In 2022, Chinese foreign direct investment (FDI) in Mexico soared by 48% year over year, from $1.7 billion to $2.5 billion
Mexico has the third largest Chinese FDI footprint in the region, behind China’s fellow BRICS partner Brazil ($5.7 billion) and Argentina ($2.94 billion). This puts Mexico in an interesting — and somewhat delicate — position.
On the one hand, its economy is benefiting handsomely from North America’s nearshoring trend, which is seeing a wave of global companies relocate some or all of their operations from China and other parts of Asia to Mexico in order to serve the US market. Last year, it attracted $35.3 billion in FDI, its highest level since 2015. The sectors attracting most interest among companies relocating to Mexico include automotive assembly plants and suppliers, telecommunications, electronics, pharmacochemical and textile industries.
On the other hand, many of the companies relocating to Mexico are apparently Chinese. Alarmed by the recent shipping chaos caused by the COVID-19 pandemic and growing geopolitical fractures, they are hoping to skirt North American trade restrictions, including USMCA’s rules of origin, by setting up factories in Mexico, as the New York Times reported in February:
So American goods will still be made by the Chinese but in Mexico not China proper.