In a trade environment where protectionism and supply-chain decoupling have left them with little other recourse, Chinese companies are finding themselves compelled to move production to Mexico, and any additional containment efforts by Washington would hit Americans in their wallets, according to a former high-ranking Chinese trade official.
Long Yongtu’s condemnation of hardline moves targeting Chinese goods came during a panel discussion on Tuesday ahead of the opening of the Boao Forum for Asia, which is taking place until Friday in the southern Chinese resort town of Boao, Hainan province.
The former vice-minister of foreign trade, and China’s point man during its 15-year talks to join the World Trade Organization more than two decades ago, also accused Washington of destroying the world’s free-trade system that it once took the lead in establishing.
It is the globalised economic and trade systems that are at stake … now the US is dismantling the system
On Tuesday, Long touched on one of the changes since then, noting that the data he has collected reveals a seven-fold increase in Chinese investors buying land in Mexican industrial parks since 2019.
“These Chinese companies could have continued to make goods in China for America at reasonable prices, but now they have to bear the extra costs of migrating to Mexico, and US consumers are grappling with more expensive goods,” he said.
Long said that ordinary Americans should be better informed on the manifold benefits of free trade, and that discussions should return to the realm of common sense and the proven and objective laws of economics and trade.
“It is the globalised economic and trade systems that are at stake, they were built by the US and the West after World War II, but now the US is dismantling the system,” he alleged.
Long’s comments came at a time when US politicians have turned their attention to Chinese investment in Mexico while stepping up restrictions on made-in-China goods in the run-up to November’s elections.
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And Trump, again the presumptive Republican candidate for president, said this month on the campaign trail that, if re-elected, he would slap a 100 per cent import tariff on cars made by Chinese companies in Mexico.
Chinese exporters and manufacturers with an interest in the US market have been making a beeline to Mexico, which has a free-trade agreement with the US, to bypass punitive tariffs that the Trump administration slapped on China in 2018, kicking off a trade war between the two sides that has persisted under Biden.
China’s overall trade edged up 5.5 per cent in the first two months of this year, reversing a 5 per cent dip in 2023, according to official customs data.
Last year, Chinese exports to the US saw a year-on-year drop of 13.1 per cent to US$500.3 billion. At the same time, Mexico-bound shipments increased by 5.7 per cent, year on year, to US$18.5 billion.
Another panellist at the Boao Forum on Tuesday, former US commerce secretary Carlos Gutierrez, said any tariffs that may be imposed on “made by China” goods assembled in Mexico, including on electric vehicles, would be “unfortunate”.
“Tariffs are not good,” he told the Post on the sidelines of the event.
And Gutierrez, who served in the administration of George W. Bush from 2005-09, said that if Chinese firms can benefit from moving production to Mexico and investing there, they should continue doing so.
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The former US official added the US bears “a lot of responsibility” for the spreading trade fragmentation, and he also pointed out that sentiments against free trade, especially trade with China – with rhetoric like “you lost your job and it’s China fault” – have been dominating the discourse.
“If someone now says tariffs aren’t good, then he will be labelled ‘pro-China’,” Gutierrez said, adding that political convenience and election buzzwords fly in the face of economic realities.
