- The paper estimates China-linked entities have about US$15B invested in Mexico across 200+ manufacturing and infrastructure projects, far above official counts and potentially more than doubling with pending deals.
- Projects cluster in nearshoring states such as Nuevo Len and other northern/central hubs tightly connected to U.S. supply chains.
- Chinese greenfield investment has accelerated since 2020, focused on auto parts, electronics, machinery, and industrial parks, but remains small versus overall U.S.-led inflows and some mega-projects are delayed.
- The trend heightens USMCA and geopolitical scrutiny, including fears of tariff circumvention and Mexicos limited capacity to screen sensitive foreign capital.
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The working paper, “Quantifying Investments in Mexico by China-Linked Entities,” delivers a revised tenure of China’s exposure in Mexico, estimating some US$15 billion in realized investment stock and claiming that official figures are undervaluing PRC-linked manufacturing and infrastructure by 7- to 10-times. The identification of over 200 discrete investments suggests that China’s presence in Mexico has both scale and breadth.
Geographically, the investments have clustered in states that are logistically proximate to the United States and are industrially competitive—Nuevo León, Coahuila, Guanajuato, Querétaro, and San Luis Potosí. These places benefit from nearshoring advantages—roads, rail, access to U.S. inputs like natural gas—that support output destined for the U.S. market without suffering high transportation or tariff costs.
On flows, multiple studies indicate a marked uptick since 2020 in greenfield Chinese investment: the Brookings & Dallas Fed data show that greenfield investments now dominate new deal value and announcements. For example, in Nuevo León, China was responsible for US$11.2 billion of foreign investment in 2023, roughly the second largest source after the U.S.. That is still far below U.S., Canadian, German, and Japanese investment when looking at total annual inflows.
Sectorally, most investment is in basic and mid-level manufacturing—auto parts, electrical and electronics, machinery—and industrial park development. Few Chinese firms have yet to establish full automotive OEM operations in Mexico; many operations involve component production or assembly rather than exporting finished vehicles. Furthermore, some proposed mega-projects (e.g. by BYD or CATL) have been delayed or put on hold due to political, regulatory or diplomatic concerns.
Strategically, these patterns intersect with trade policy. The United States is wary that Chinese companies are using Mexico as a way to circumvent U.S. tariffs under USMCA. Mexico has begun imposing tariffs on goods from non-USMCA partners—including China—and there is pressure to strengthen foreign investment review mechanisms. Mexico’s regulatory tools are currently less robust than those in Canada or the U.S., especially for sensitive sectors.
Open questions remain: how many of China’s announced investments will materialize (vs. remain aspirational or abandoned); how Mexican public policy will balance economic growth with trade pact compliance and geopolitical risk; whether Mexico will develop stronger investment screening; and whether U.S. policy will tighten further, particularly during the USMCA review in 2026.
Supporting Notes
- Working paper identifies “more than 200 discrete PRC-linked manufacturing and infrastructure investments worth an estimated US$15 billion,” with potential to more than double the capital stock.
- These investments cluster in states like Nuevo León, Coahuila, Guanajuato, Querétaro, and San Luis Potosí, which have strong links to U.S. logistics and industrial clusters.
- According to Rhodium Group, Chinese companies announced nearly US$4 billion in investment deals in Mexico in 2023 and US$1.4 billion in the first half of 2024—around four times the average annual Chinese investment during 2014-2020.
- Dallas Fed analysis estimates China’s investment stock in Mexico at US$15 billion (Baker Institute estimate) and even higher estimates of US$22.5 billion by the National Autonomous University of Mexico.
- Official Mexican data in 2023 shows foreign direct investment announcements of US$110.7 billion in total, with China accounting for US$11.2 billion; Nuevo León received ~$13 billion from October 2021 to April 2023, creating 88,000 jobs.
- Sector breakdown: Automotive parts, electrical systems, machinery dominate Chinese investment; no Chinese auto OEMs have yet built large export-oriented plants. Some planned investments (e.g., BYD, CATL) have been delayed or cancelled due to regulatory or security concerns.
- Regulatory gap: Mexico’s foreign investment screening is less rigorous than that of U.S. or Canada; China’s investments visible in greenfield projects where new capacity is built.