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Chinese president visits Mexico, economic tension between nations highlighted

June 4, 2013

China's economy has grown by leaps and bounds in the past few decades. In fact, the CIA World Factbook identifies the nation's gross domestic product as having increased by more than tenfold since 1978, and now ranks it as the world's second-largest economy. However, this growth, and the country's status as the world's largest exporter, has not come without some cost to the reputation of China and its goods.

This has recently become an issue in Mexico, which, according to USA Today, has received a massive influx of Chinese goods in the recent past. Chinese President Xi Jinping visited Mexico on June 4 as part of a trip that will culminate in Xi's arrival in California. His presence in the nation highlights the ways in which China's meteoric rise to the ranks of the world's largest economies has adversely affected certain companies, Mexican businesses being among them. 

The news source reports that the specific issue is that the tremendously low cost of countless Chinese goods - everything from toys to prepaid calling cards - has all but phased out many small Mexican businesses and artisans. In response, Mexico has in the past raised import tariffs on Chinese goods as high as 533 percent to sway the economic balance back in the favor of Mexican-made goods. This simply led to many of the items being smuggled across the United States-Mexico border. Even though the tariff currently stands at only 25 percent, the black market for these items persists, and many Mexican consumers are serving as its customers. 

As a result of these issues, Mexico and China are attempting to improve their economic relations, as Jose Antonio Meade, Mexico's Foreign Relations Secretary, made clear in a recent statement.

"In the case of China, the second most important economy in the world, it's an area of opportunity," Meade said, according to the news source. "The presence of Mexico in China is less than its potential and the presence of China in Mexico is less than its potential." 

In efforts to begin mending any rift between the countries, Mexican petroleum provider Pemex will now be exporting 30,000 barrels a day to China, and officials from both nations have considered the possibility of a free-trade agreement.

Mexico is not the only nation or government that has experienced recent economic conflict with China. According to The New York Times, the European Union imposed tariffs of 11.8 percent on solar panels from China. The EU's trade commissioner, Karel de Gucht, ordered this sanction based on his belief that China was selling the products below the cost of making them.

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