China's Economic Effects on the U.S
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This book advances the concept of “triangular relationships” by analyzing benefits and conflicts within US-Mexico-China relations as Chinas´ influence increases. The contributors examine this phe- nomenon from economic, political, and social perspectives. China´s deepening impact in the Americas suggests that triangular relation- ships, such as those examined in this volume, will necessarily weigh more heavily into other fields of research in the future. This project is a “triangular relationship” itself in many ways, considering the effort and support of each of the authors. Not only do we have experts and analysis from China, Mexico, and the United States represented herein, but we have been able to count on the support of three different institutions –the Centro de Estudios China-México (CECHIMEX) from the School of Economics at the Universidad Nacional Autónoma de México (UNAM), the Center for Latin American Studies at the University of California in Berkeley, and the Center for Latin American Studies at the University of Miami. China and the New Triangular Relationships in the Americas. China and the Future of US-Mexico Relations Enrique Dussel Peters, Adrian H. Hearn and Harley Shaiken (eds.). Center for Latin American Studies, University of Miami; Center for Latin American Studies, University of California, Berkeley; Centro de Estudios China-México, Facultad de Economía, Univer- sidad Nacional Autónoma de México. ISBN 978-0-9892901-0-4 Center for Latin American Studies University of Miami 1111 Memorial Drive Coral Gables, FL 33146 Tel. 305-284-1854, http://www.as.miami.edu/clas Center for Latin American Studies University of California, Berkeley 2334 Bowditch Street Berkeley, CA 94720 Tel. 510-6422088, http://www.clas.berkeley.edu Centro de Estudios China-México Facultad de Economía Universidad Nacional Autónoma de México Facultad de Economía, Edficio B, Segundo piso, Ciudad Universitaria, 04510, DF Tel. 55-56222195, http://www.economia.unam.mx/cechimexs Printed in Mexico Contents Foreword Enrique Dussel Peters, Adrian H. Hearn, and Harley Shaiken .................................................................................. 7 Section I. Economy, Trade, and Investments 1. China’s Economic Effects on the U.S.-Mexico Trade Relationship: Towards a New Triangular Relationship? ................................................................................................................ 13 Kevin P. Gallagher and Enrique Dussel Peters 2. The Impacts of China’s Peaceful Influence on U.S.-Mexican Relations: A Triangular Perspective ................. 25 Ping Wang 3. Meeting the China Challenge to Manufacturing in Mexico ............................................................................... 37 Ralph Watkins Section II. Policy 4. The Mexico-China-U.S. Triangle: An Ethnographic Perspective ........................................................................ 59 Adrian H. Hearn 5. U.S.-Mexico-China Relations in the Context of Regional Cooperation. A Chinese Perspective ..................... 67 Chunsi Wu 6. The Strategic Partnership Between China and Mexico: A Multilateral Perspective ........................................ 73 Hongbo Sun 7. The China-Mexico-US Triangle: Trade, Security, and Complex Interdependence ........................................... 85 R. Evan Ellis Section III. Conclusions and Debates 8. Conclusions and Debates on the US-Mexico-China Relationship ..................................................................... 95 Ariel C. Armony On the Authors ........................................................................................................................................................ 109 7 Foreword The emergence of China in the last part of the 20th century –or “reemergence” from a historical perspective- is having multiple impacts on a global scale. This gradual acknowledgement – given the impressive pace of eco- nomic development in the last decades- has resulted in an increasing gap between the latter trend with insti- tutional development and academic analysis.The traditional form of analyzing these impacts has been either domestically –i.e. within China– or bilaterally, i.e. the effect of China on other countries or groups of countries. Domestically, the socioeconomic changes within China since its revolution in 1949, and after the reforms of the 1970s, in terms of production, employment, wages, migration, urbanization, trade, politics, culture, among other topics, have been studied in detail both in China and internationally. Bilaterally in Latin America and in the Carib- bean, for example, there has been increasing literature on the effects of China on trade, employment, agriculture, environment, investments, specific segments of value-added chains, and particularly on bilateral diplomatic and political relationships. China’s “come back”, however, is not only limited to these impacts. Until very recently, and as reviewed in the respective articles of this book, there have been few analyses or initial attempts at understanding how China’s new status is affecting bilateral relationships elsewhere. The main topic of this book, then, is the triangular rela- tionship between Mexico, the United States, and China, and specifically how China’s increasing presence in Latin America and the Caribbean is affecting the historic and dynamic relationship between Mexico and the United States. This triangular relationship is substantially interdisciplinary and has, at least in the beginning, begun to af- fect trade, investments, and the political relationship between the United States and Mexico. This book attempts to identify in which concrete terms China has begun to affect the bilateral relationship between Mexico and the United States. Contrary to other recent initial analyses on this issue, we base our study on this question in order to examine the triangular relationship in detail from an economic and political perspective. In the future, this tri- angular relationship will necessarily have to weigh more heavily in other fields of research. However, as we shall see below, China is profoundly changing bilateral and inter-American relationships, specifically between the US and Mexico, resulting in important implications for the future. It is important to understand that these new forms of triangular relationships –based on China’s increasing presence both regionally and globally- must be discussed and researched in detail in the future, not only in the form of an academic debate, but as part of a process that will have wide policy repercussions in all of the coun- tries involved, not just in Latin America and the Caribbean. This is the case, for example, in most of Asia - for countries like Japan, Vietnam, Korea, India, and the Philippines, among others - and their relationships not only with the United States and China, but with other countries as well. Finally, these new triangular relationships go beyond inter-Asian triangular relations with China (i.e. China’s impact on the Argentina-Brazil relationship, as well as the Mexico-Venezuela relationship). From this perspective, the book presents analyses from China, Mexico, and the United States on China’s impact on the economic and political relationship between Mexico and the US. The authors will discuss emerg- ing tensions and policy approaches to trilateral engagement from two general perspectives: a. economy, trade, and investment, and b. policy, with the objective of highlighting the massive effects that China is having on the Mexico-US relationship. Thus, there is no need for general introductions of each country (Mexico, China, and the US). Instead, we will focus directly, from the beginning, on their bilateral and triangular relationships. This book contains eight chapters. The first chapter of Section I, written by Kevin P. Gallagher and Enrique Dus- sel Peters, discusses the extent to which China is affecting bilateral trade between Mexico and the United States. Based on aggregate and detailed import and export flows of the twenty most important products, the analysis concludes that China is becoming NAFTA’s “fourth member”, given that it has integrated itself into practically all of the region’s major trade items in the last decade. The authors find that China is quickly outcompeting Mexico in the US market, as well as outcompeting the US in Mexico: they identify 52 sectors in which China had increased its role until 2011, and in which both Mexico and the US are significant trading partners. Mexico is losing market share in the United States in those same 52 sectors, which collectively represent 49 percent of all of Mexico’s exports to the U.S. The “threat analysis”, based on bilateral and trilateral analyses, highlights China’s significant 8 entrance into NAFTA and substantial displacement in the region. The impact in terms of competitiveness and job loss remains to be measured. The analysis of Ping Wang highlights that in the Mexico-US-China triangular trade relationship, the United States is the key player. While China’s presence has increased, the United States remains a critical influence on both Mexico and China. Furthermore, the author suggests that China’s rise and emergence in terms of trade and investments in LAC, and specifically in regards to this triangular relationship, will slow increasingly in the future, considering its specialization in industrial commodities and products, rising wages in China, and the high number of multinational corporations involved in Chinese exports. For Ping Wang, the politically