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### Viewing cable 09MEXICO701, CHINESE VP TRIP TO MEXICO - JOURNEY BEGINS WITH A

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
09MEXICO701 | 2009-03-10 16:43 | 2011-01-02 21:30 | CONFIDENTIAL | Embassy Mexico

`

    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

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