China’s re-creation of the ancient ‘Silk Road’ trade route across the Eurasian continents is more than a simply a super highway from South Korea to London… it is an organizational structure that is intended to both develop and operate trade and banking hubs in countries all along the global route.
Known also as the Belt and Road initiative, the idea of an overland and connected seaward trade construct is now peaking the interest of a North American economy, who’s long standing partnership with the U.S. may soon be split between them and the growing economic power hailing from Asia. This is because in a new report on Dec. 14, Mexican authorities announced they want to cultivate even greater productivity and trade with China, and increase their exports to the Far Eastern economy well above the current 2% it now does in annual trade.
Mexico has yet to fully tap its business potential in trade with China and should modernize its productive structure, Mexican daily El Universal said over the weekend.
To make the most of its ties with the Asian country, Mexico needs “to modernize and diversify its productive structure,” among other measures, the daily said, citing a report by the Organization for Economic Cooperation and Development (OECD) and other agencies.
The report, titled “Latin American Economic Outlook 2016,” was released Friday inCartagena, Colombia, urging Latin America as a whole to use its partnership with China “to foster mutual development strategies.”
Only 2 percent of Mexico’s total exports were destined for China in 2014, the daily said, with many of those sales (40 percent) involving mid- to high-technology industrial goods or mining products (30 percent).
Some 67 percent of Chinese imports to Mexico, meanwhile, are mid- to high-technology industrial goods. – China Daily
China has been grabbing long-standing U.S. trade partners by the boatload over the past few years, and it is in part to the decline of dollar usage around the world, and the need for country’s to free themselves from dollar hegemony. And with China’s new inclusion in the IMF’s SDR basket, its standing as an accepted reserve currency will only increase the move East by nations wanting to trade directly in their own currencies.
Mexico is like many Latin American nations who rely upon oil or other natural resources as their primary revenues for growth. But a sea change towards becoming an even bigger producer of goods, and modernizing its technology and infrastructures, could actually make Mexico a Belt and Road hub one day as the silk road intertwines itself to every continent on the planet.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.