México’s growing manufacturing sector is a hot spot for nearshoring. But with China’s influence in the region on the rise, things get complicated. The country is rich in natural resources, making it a prized location. Can México manage its resources without relying on outsiders?
What’s beneath México’s soil that China wants?
México has a treasure trove of valuable natural resources, including the highly sought-after metal Lithium. Although the Lithium industry in the country has yet to take off due to technological and infrastructure issues, it holds 1.9% of the world’s reported reserves. This is a significant figure for powers like the US and China, which are eager to secure their supply of the metal.
The demand for renewable energy is driving up the need for Lithium. México is a crucial player in this process. China is one of the closest to securing exploitation concessions with Ganfeng Lithium, despite the cancellation of some contracts. They still hope to recover the deposits in Sonora and Chihuahua.
Made in México or made by China?
As US companies leave China for other countries like México, Chinese manufacturers are following suit. They’re setting up shop in México, snapping up space in industrial parks. This is a win for the local economy, as Chinese companies invest in Mexican workers and employ them.
However, México is stuck in a tricky position between the US and China. The country’s inability to exploit its resources is a significant challenge. China’s dominance in the exploitation, processing, and use of Lithium makes it an attractive partner. But this also raises concerns about México’s dependence on external help.
It’s not just Lithium that China is after; companies are also looking to exploit other minerals like iron and copper. While both countries can benefit from cooperation on green technologies, México’s reliance on foreign companies hinders its progress in managing its resources.
China is México’s second-most significant trading partner globally. Their relationship has grown due to nearshoring, with China investing heavily in México to tap into its proximity to the US and the T-MEC free trade agreement. However, with Trump’s tariffs, this advantage may be lost.
A delicate balance
México faces significant challenges in its relationship with China. The US-China trade tensions and Trump’s tariffs have raised the stakes. A close relationship with China could be detrimental to México, given the potential sanctions and the desire to exploit the country’s natural resources. As the situation evolves, México must navigate this delicate balance to protect its interests.