November 13, 2014 / 7:07 AM / 5 years ago

China, Mexico eye $7.4 billion in investment funds

BEIJING (Reuters) - China and Mexico will set up a $2.4-billion investment fund to support infrastructure, mining, and energy projects and are eyeing an oil deal worth up to $5 billion, Mexican President Enrique Peña Nieto said on Thursday.

Since Peña Nieto took office in late 2012, he has sought to forge closer ties with China following years of rivalry between the two countries seeking to supply the U.S. market.

“I want to stress that the basis of our relationship is trust,” Peña Nieto told reporters in Beijing after meeting Chinese President Xi Jinping.

“Now Mexico-China relations are broader, more stable, more productive and more beneficial for our people.”

Peña Nieto also said three Chinese firms would invest up to $5 billion to finance projects for Mexican oil company Pemex, including the Ramones pipeline.

Peña Nieto and Xi oversaw the signing of 14 pacts, including a China Development Bank deal with Bancomex and Pemex to help with petroleum projects, as well as between Industrial and Commercial Bank of China (601398.SS) and Pemex and Chinese oil giant CNOOC.

No details of any of the agreements were provided.

Peña Nieto also did not mention in his public comments Mexico’s abrupt rescinding of a $3.75-billion high-speed rail deal originally awarded to a Chinese-led consortium.

The consortium was led by rail builder China Railway Construction Corp (601186.SS) (1186.HK) and included Mexican companies and Chinese train maker CSR Corp (601766.SS) (1776.HK).

Mexico canceled the deal last week after lawmakers alleged the railway contract was rigged.

China has expressed shock at the cancellation, and Chinese Premier Li Keqiang told Peña Nieto this week that Chinese firms should be treated fairly.

China’s trade ministry said on Wednesday it believed there were legal grounds for compensation after the agreement was canceled.

Citing Mexico’s public works act, the ministry said on its website that the successful bidder was owed compensation, a sum which the law did not stipulate, if the government decided against signing a contract.

The bidder was eligible to be compensated for the cost of preparing its proposal, the Chinese ministry added, without stating a figure.

Reporting by Gerry Shih; Additional reporting by Brenda Goh in SHANGHAI and Michael O'Boyle in MEXICO CITY; Writing by Ben Blanchard; Editing by Clarence Fernandez

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