Chinese FDI into Mexico has surged, raising concerns about Mexico's role as a backdoor for Chinese goods into the US market. With the US election approaching and a USMCA review set for 2026, policymakers may push for tighter regulations on Chinese investments in Mexico, by FDI Intelligence
In 2023, Chinese foreign direct investment (FDI) in Mexico reached a record high, intensifying concerns about Mexico's growing role as a conduit for Chinese goods entering the US market. As Mexico replaced China as the US's largest source of imports, some US politicians, including Donald Trump, have pointed to this trend as a way for China to bypass trade barriers. Mexico benefits from its proximity to the US and its membership in the United States-Mexico-Canada Agreement (USMCA), which allows Chinese goods to enter the US market more easily if they meet certain transformation criteria.
The rapid increase in Chinese greenfield investments, particularly in the automotive sector, has drawn attention, though overall FDI remains low compared to other countries. However, with the US election looming and a scheduled review of the USMCA in 2026, Chinese investments in northern Mexico may come under heightened scrutiny. While concerns about Chinese FDI may be exaggerated, the geopolitical climate and potential for tighter regulations could threaten Mexico’s advantageous position as a manufacturing hub.
Mexico’s economic ties with China, particularly in basic manufacturing sectors, have expanded, but Chinese companies have been cautious in making capital-intensive, high-tech investments. As the US navigates its trade policies, both the US and Mexican governments must balance these trade relations to avoid jeopardizing the benefits of the USMCA, especially if Chinese FDI in Mexico continues to rise.
