VZCZCXYZ0005
RR RUEHWEB

DE RUEHME #0701/01 0691643
ZNY CCCCC ZZH
R 101643Z MAR 09
FM AMEMBASSY MEXICO
TO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0485
INFO RUEHZI/WHA IM POSTS COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 02 MEXICO 000701

SIPDIS

STATE FOR WHA/MEX/WOLFSON; STATE PASS TO COMMERCE FOR
ITA/MAC/ONAFTA/WORD

E.O. 12958: DECL: 03/09/2019
TAGS: PREL ECON EFIN ETRD CH MX
SUBJECT: CHINESE VP TRIP TO MEXICO - JOURNEY BEGINS WITH A
FIVE-STEP PROPOSAL

REF: BEIJING 518

MEXICO 00000701 001.2 OF 002


SUBJECT: CHINESE VP TRIP TO MEXICO - LATAM JOURNEY BEGINS
WITH A STEP

REF: BEIJING 518

Classified By: Acting Deputy Chief of Mission James Williard,
reasons 1.4 (b/d).

¶1. (C) SUMMARY: Last month,s three-day visit by Chinese
Vice President Xi Jinping to Mexico was the first stop of a
six-nation tour in the region. In his meetings with
President Calderon, senior government officials,
congressional leadership, and businessmen, Vice President Xi
called for the rapid advancement of deeper economic and trade
relations between the two countries. Xi,s visit
intensified the Mexico-China dialogue; however, Mexico,s
trade deficit with China and concerns over China,s approach
to investment continue to color Mexico,s perception of China
as a true partner. END SUMMARY.

¶2. (SBU) The February 9-11 visit was a follow-up to the
state visit by President Calderon to China in July 2008, at
the end of which President Calderon invited President Hu to
visit Mexico again soon. The press reported that Vice
President Xi met with Calderon on February 11 and pushed for
the two countries to make full use of the Strategic Dialogue
Mechanism (established in July 2008) to map out detailed
plans for cooperation on relevant issues in their bilateral
and multilateral agendas. Xi also expressed China,s desire
to continue reinforcing binational exchange and cooperation
in the areas of education, science and technology, culture,
health and medicine, tourism, social development and the
prevention of natural disasters, in order to further increase
mutual knowledge and friendship between the two countries.
Finally, Xi stated that as major developing countries, China
and Mexico share similar positions and common interests in
light of the current economic situation, and should maintain
close contact and coordinate stances in protecting themselves
and other developing countries from the impact of the global
financial crisis. In response, Calderon declared that Mexico
is ready to deepen the strategic dialogue and expand
coordination and cooperation on major international and
regional issues. He also said Mexico will work with China to
meet the challenges brought about by the financial situation.

¶3. (C) What the leaders did not discuss was Mexico,s huge
trade deficit with China, which reached USD 30 billion in
2008 - Mexico,s largest trade gap with any of its partners.
Neil Davila, Regional Director of ProMexico (Mexico,s FDI
promotion agency) responsible for promoting Asian investment
in Mexico, told ECONOFF that Mexico,s government hopes this
trade deficit can be offset by Chinese investment in Mexico.
Total Chinese FDI stock in Mexico reached USD 70 million in
2008, up almost 25 percent from 2007. Bruno Ferrari, Director
of ProMexico, told an audience at a luncheon in Xi,s honor
that he hoped Chinese investment in Mexico could match the 25
percent increase this coming year. &There are great
opportunities for Chinese investors in Mexico, in different
sectors, like automotive, construction and energy,8 he said.
(NOTE: While Chinese investment in Mexico is up, overall
foreign direct investment in Mexico is down ) from USD 27.2
billion in 2007 to USD 18.6 billion in 2008. END NOTE.)

¶4. (C) Accompanying Vice President Xi were representatives
from 20 Chinese companies; among them, copper tube producer
Gold Dragon Group, who claim they have already invested USD
100 million in Mexico and intend to invest an additional USD
100 million over the next few years. (NOTE: Mexico,s
Economy Secretariat,s FDI analysts dispute Gold Dragon,s
prior investment claim, but confirm that the leading copper
producer,s planned Mexican plant, in the copper-rich state
of Coahuila with a designed capacity of 70,000 tons of
precise copper tube, will cost up to USD 100 million to
build. END NOTE). Chinese automaker ChangAn took advantage
of Xi,s Mexico trip to announce its joint venture with a
Mexican company to launch a car assembly plant in Mexico, but
was short on specifics. In addition, Chinese computer
manufacturer Lenovo also announced the opening of its USD 40
million plant in Monterrey, Nuevo Leon ) its third
production facility in Monterrey. Chinese investment in
Mexico,s manufacturing sector is well-positioned to take
advantage of access to the United States market under NAFTA
as well as serve as a launching pad for exports to other
markets in Latin America.

¶5. (SBU) At the same luncheon as mentioned above, Vice

MEXICO 00000701 002.2 OF 002


President Xi raised a five point proposal to rapidly advance
the economic and trade relations between China and Mexico:
1) Both sides should trade and advance their economic and
trade cooperation from a strategic perspective; 2) the two
governments should further improve their services; 3) Mexico
and China should actively promote cooperation in key sectors
) mining, telecommunications, agriculture, fisheries,
processing and assembly plants, and renewable energy; 4)
Chinese and Mexican enterprises should be the main force
behind increased economic and trade cooperation; and 5) both
sides should expand their cooperation in international
economic affairs.

¶6. (C) This was the luncheon at which Xi made an
uncharacteristic outburst to the mixed group of Chinese
businessmen, overseas Chinese citizens, and Mexican officials
and potential business partners (see ref). Local media did
not pick up his comments and local pundits offered no
opinions, but it should be noted that his criticism of
&well-fed foreigners8 sharply contrasted from the
overarching cooperation theme of his visit and were delivered
on the first leg of his trip in a country with strong ties to
the United States.

¶7. (C) COMMENT: Vice President Xi,s visit intensified
the Mexico-China dialogue. Calderon was positive in his
perception of this visit in his remarks to the press, and the
GOM used this trip to push for additional Chinese investment
in Mexico to offset the wide trade gap. However, Mexican
officials are reluctant to push too strongly for increased
Chinese presence. &We don,t want to be China,s next
Africa,8 ProMexico official Davila told ECONOFF, referring
to the oft-cited criticism that China has pursued a strategy
of seizing the continent,s huge natural resources while
dumping cheap industrial manufactured products into Africa,s
markets. &We need to own our country,s development.8 END
COMMENT.
Visit Mexico City's Classified Web Site at
http://www.state.sgov.gov/p/wha/mexicocity and the North American
Partnership Blog at http://www.intelink.gov/communities/state/nap /
BASSETT