Mexico president pushes trade ties in China while protests rage at home 

Peña Nieto's Beijing trip amid massive political crisis at home shows heavy bet on China ties as economic boost

November 13, 2014 6:45PM ET

Even as Mexican President Enrique Peña Nieto faces massive and dangerous unrest at home over the unsolved disappearance of 43 student teachers, he met with his Chinese counterpart in Beijing on Thursday — a sign of the importance his government is attaching to building trade with the People’s Republic.

Proponents of China trade in Mexico are defending Peña Nieto’s sharply criticized trip abroad during a national crisis, arguing that closer financial ties with China will help Mexico address the economic disparity that prompted the missing students to join the protests that apparently led to their disappearance on Sept. 26. 

Peña Nieto and Chinese President Xi Jinping met amid the Beijing opening of a cultural exhibit on Maya civilization, and announced they will ramp up cooperation in finance and infrastructure. Diplomatically, they have their work cut out for them — their announcement follows Mexico’s cancellation of a joint Chinese-Mexican consortium’s contract to build a $4.3 billion high-speed railway from Mexico City to the northwestern city of Queretaro. The company’s competitors had reportedly alleged there was a lack of transparency in the bidding process.

China Railway Construction Corporation, the Chinese company that lost the bid, said it was “extremely shocked” by Mexico’s decision to withdraw the contract, according to a report published by Chinese state news agency Xinhua on Oct. 9, a day before Peña Nieto traveled to Beijing for the Asia-Pacific Economic Cooperation (APEC) summit on Monday.

In Mexico, protesters decrying the disappearance of the 43 students have criticized Peña Nieto’s trip as putting international commerce ahead of public concerns over corruption allegations. The missing students — who had been campaigning for affordable education — are widely believed to have been killed by drug gangs colluding with local police. Guerrero state’s former governor and his wife have been charged with ordering the killings.

Peña Nieto’s staff had not responded to an interview request at time of publication. But Mexican proponents of more China trade have said his visit aims to address some of the root causes of the Guerrero crisis.

“Economic opportunities for Mexico can help to decrease the discontent of the people,” said Karla Loyo Quintero, general manager of the Mexico City-based China Chamber of Commerce and Technology Mexico.

“Mexico has to take this opportunity to strengthen its relations with China, when this country has as the long-term strategy of reinforcing the alliance with developing countries,” Loyo Quintero said. “Now our country is facing important changes and reforms in several sectors such as energy, telecommunications and [finance], in order to attract more foreign investment and facilitate business operations. Mexico's presence in forums like APEC opens for us a window of opportunity, to be taken as an important economic and political player in the region with a voice in the decision-making process.”

But in recent days protesters have taken to the streets in Mexico and set their sites on Peña Nieto’s administration, accusing it of failing to address chronic corruption and public security concerns. On Sunday, protesters set fire to the doors of the nation’s presidential palace.

And as Beijing builds deeper inroads across Latin America — with a slew of freshly penned infrastructure and energy contracts across the continent and China’s trade with the region growing faster than that of the United States —Beijing’s relationship with Mexico has faltered under previous administrations. 

Under the administration of Peña Nieto’s predecessor Felipe Calderon, China and Mexico appeared to be vying for opportunities to export goods to the U.S. — a major driver of both economies — according to Duncan Wood, director of Washington-based think-tank the Wilson Center's Mexico Institute. In October 2012, just before Peña Nieto assumed the presidency, Mexico filed a trade dispute against China with the World Trade Organization, saying that Beijing was giving subsidies to the nation's clothing and textile sectors — which would have violated the terms of China’s membership. 

Bolstering Mexico-China relations is one of the current Mexican administration’s legacy works, Wood said.  The two nations’ bilateral trade volume remains roughly the same as it was under the last years of the Calderon administration at $36.7 billion, according to Chinese statistics from 2013. But after the second high-profile diplomatic visit of the two administrations in little over a year, that is soon expected to change.

Wood said this goal made Peña Nieto’s APEC trip too crucial to put off, even with a severe crisis at home. “The president really does believe this is a priority for Mexico foreign relations,” he said. “Cancellation [of Peña Nieto’s trip to APEC] would have been seen as an insult by the Chinese. There was a diplomatic priority there.”

“The president’s presence in China is important, and will be seen as a peace offering by the Chinese,” he said.

Wood added that stronger Chinese-Mexican relations could even benefit the U.S., if such ties help fight the economic disparity that has led to drug-cartel violence bleeding over Mexico’s northern border, and bolstered the flow of undocumented workers.

“For many years, people have speculated that the U.S. would not welcome Chinese investment in Mexico,” Wood said, “The argument was Mexico is in the U.S.’s backyard. That’s outdated.”

Also, even though China has replaced the U.S. as the leading trade partner of countries across Latin America, Wood said that will not be the case in Mexico in the foreseeable future.

“Geography and economic gravity will take care of that,” he said. “Mexico trades more with the U.S. in eight days than it does with China in a given year.”