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China; Mexico: Agreement on Trade Balance and Oil

(Apr. 23, 2013) Mexican President Enrique Peña Nieto, during his recent trip to <?Sanya, China, on April 6, 2013, agreed with his Chinese counterpart, Xi Jinping, on implementing actions to balance the trade between the two countries. Currently Mexico has a trade deficit with China.

Following the meeting of the two Presidents, in which President Peña Nieto was received with military honors, he highlighted the offer of the Chinese President to participate in the financing and development of infrastructure investment projects in Mexico, especially in mass transit and railroads.

In addition, Peña Nieto announced after the meeting that Mexican Petroleum (PEMEX) – the state-owned petroleum company – has signed an agreement with the Chinese company Sinopec, under which Mexico will export 30,000 barrels of oil daily to China. Initially this agreement will last two years, and Mexico will receive an estimated US$1.95 billion a year, assuming that the price per barrel is $100.

The agreement also provides that Mexico will send to China 10 million tons of steel annually, at a cost of US$1500 million, which would come to US$15 billion by the end of the deal. This deal could generate 16,000 jobs directly and indirectly over the next 10 years in the State of Oaxaca, Mexico.

The following day, at the opening of the Boao Forum, Peña Nieto spoke to political and economic leaders of Asia and stated that the structural reforms that Mexico is implementing will promote the economic and social development of the country. He invited the businessmen of the Asia-Pacific region to invest in Mexico, noting that his country currently maintains macroeconomic stability conditions, prospective growth, and low inflation. (Francisco Reséndiz, México y China Cierran Acuerdo Petrolero, El Universal (Apr. 7, 2013); Acuerda México y China Equilibrar Balanza Comercial,El Universal (Apr. 7, 2013).)