MEXICO CITY (Reuters) - China and Mexico promised broad cooperation on issues ranging from energy to mining and infrastructure during a state visit by Chinese President Xi Jinping on Tuesday, but any free-trade pact between the emerging market powers is still some way off.
Mexico’s government has voiced worry about its massive trade deficit with China, an imbalance Mexican President Enrique Pena Nieto wants to set right.
Mexico wants “to find a greater equilibrium in our trade balance,” Pena Nieto said during a joint address to the media with Xi. They did not take questions.
He said the two countries had also agreed to defuse a standoff over textiles that had resulted in litigation.
The two governments signed agreements to cooperate on commercial defense, and agreed on access for Mexican tequila and Mexican pork to the Chinese market.
State oil monopoly Pemex said Export-Import Bank of China would provide it with a $1 billion credit line to buy ships and offshore equipment. It also signed a memorandum of understanding with state-owned Xinxing Cathay International Group to explore ways to work together on pipelines.
More than 15 percent of Mexico’s imports came from China in 2012 - an amount worth $57 billion - while just 1.5 percent, or $5.7 billion, of Mexican exports went to the Asian giant.
Xi said China planned to sign commercial contracts to buy an additional $1 billion worth of Mexican goods, but did not specify what.
Earlier on Tuesday, Mexican Foreign Minister Jose Antonio Meade said it was too soon for a free-trade agreement between the two countries - something China is eager to pursue.
“I think at this stage it is too early to talk about a free-trade agreement,” Meade told local radio.
“I think we are still at a stage at which we are becoming aware of opportunities, opening a space for business dialogue, so it does not seem to be the instrument or path which best serves us,” he added, saying it was an alternative to evaluate in the future.
Mexico ran a slight surplus with its global trading partners last year, but posted a huge deficit with China, largely because of an influx of manufactured goods.
Mexico and China have been direct competitors to supply the U.S. market with manufactured goods and Mexican producers have fought to keep the Chinese off their turf.
“We have agreed on the importance of reinforcing mutual political trust, and broadening cooperation,” Xi said through a Spanish translator.
Xi is set to address Mexico’s Congress on Wednesday before heading to the ancient Maya pyramids of Chichen Itza. He then flies to the United States to meet President Barack Obama later in the week.
Mexico has regained U.S. market share in recent years as the labor-cost differential with China has narrowed sharply, eating into a Chinese cost advantage.
A decade ago, Mexico’s average labor costs were nearly three times higher than China’s but, according to at least one report this year, hourly wages in Mexico are now lower.
Mexico is part of the Trans-Pacific Partnership negotiations, which aim to boost trade among the Americas, Asia and Australasia. The talks include the United States, Canada and other major economies on the Pacific rim.
China has said it will study the prospect of joining the Trans-Pacific Partnership negotiations.
Writing by Simon Gardner; Editing by Peter Cooney