A Chinese tire manufacturer has recently begun construction of a $400 million plant in central Mexico. However, this project will not appear in the country’s Foreign Direct Investment (FDI) records, as Sailun Tire’s financing is channeled through a subsidiary in Singapore.
While this structure is common and detailed in the company’s statement, it is likely to increase caution in Washington. According to the US consultancy Rhodium Group, the actual volume of Chinese investment in Mexico could be up to six times greater than that reflected in official figures.
With imports from China on the rise, US lawmakers are warning that Mexico, as its largest trading partner, could increasingly be serving as an alternative route for Beijing to dodge tariffs.
This poses a major challenge for Mexico: it needs to develop a clearer and more reliable picture of Chinese investments in its territory. Mexico’s priority is to maintain its strong trade relationship with the United States, which could be compromised if its ties with China generate mistrust.
“If we perceive that the Mexicans are hiding something from us… that will affect confidence and put the North American integration project at risk,” said Ryan Berg of the Center for Strategic and International Studies, a think tank based in Washington.
US President-elect Donald Trump has already signalled that he is “going to have a lot of fun” renegotiating the US-Mexico-Canada Agreement (USMCA) in order to impose restrictions on products made by Chinese companies entering the US market. Democrats, for their part, are also showing signs of taking a tougher stance.
In 2023, Mexican government data indicated that less than 2% of Foreign Direct Investment (FDI) came from China and Hong Kong, totalling around $450 million. However, the analysis group Rhodium Group identified FDI transactions of up to $1.7 billion in the same year, almost four times as much.
Armand Meyer, co-author of the Rhodium Group report, noted that they observed similar discrepancies in other countries and that Mexico’s case reflects the use of offshore entities rather than an inaccurate methodology. According to Jorge Gonzalez of The Nearshore Company, many manufacturers that set up in Mexico bring used machinery that is already depreciated, which can also affect the figures.
This situation is crucial for Mexico, which sends more than three-quarters of its exports to the United States and for whom the USMCA is key in attracting foreign investment. President Claudia Sheinbaum’s priorities, such as the clean energy and rail transport industries, are areas where Chinese companies have a large presence, and it is anticipated that pressure will increase when Donald Trump assumes the US presidency.
For his part, the Undersecretary of Economy, Luis Rosendo, expressed Mexico’s interest in working together with the US and Canada, in addition to reviewing the control of Chinese investments. The government is also considering measures such as monitoring investments for national security reasons, eliminating forced labor in supply chains and promoting local products instead of imported ones.
Mexico is open to the world, but it also has strategic trading partners… Canada and the US are key to our economy,” Rosendo told the Financial Times. “There is a protectionist consensus that has not been seen in decades.”
The relationship between the United States and Mexico has faced tensions in recent years, especially on issues such as energy, migration and the trafficking of fentanyl, which is made with precursors from China.
U.S. concerns and growing investment interest from China have become particularly noticeable in the automotive industry, a key sector for both Mexico and several American states. Donald Trump has repeatedly claimed that large Chinese electric vehicle factories are being built in Mexico; however, while companies such as BYD and Chery have evaluated options in the country, a major plant has yet to be announced.
Some Mexican businessmen emphasize that Chinese companies must also comply with the same rules of origin requirements as other foreign investors. For example, Tire Direct International, a Mexican company associated with Sailun, said that its tires will be manufactured entirely in Mexico, with about 40% of its production destined for markets outside the United States and Mexico.
“Our project is not a concern for the US because we are not using Mexico as a springboard,” the company said.
Although Chinese investment in Mexico is several times higher than official figures reflect, it is still considerably lower compared to that of the United States, which represents more than a third of foreign direct investment in the country.
However, Mexico should not ignore the US position on this issue and should instead objectively evaluate which investments are most beneficial to its development. In this regard, Durán commented on Chinese investment: “Will it contribute to development and growth, or will it simply end up generating conflicts with the United States?
