The Mexican export sector can’t compete with China’s.  Why?

In yet another reminder of the uneven evolution of the Sino-Mexican bilateral relationship, Mexican President Felipe Calderón visited China last week with the goal of encouraging investment in Mexico. The press took the opportunity to rehash the striking change in trade between the two countries since the turn of the century: Chinese exports to Mexico have grown from $569 million in 2000 to $28 billion last year; in contrast, Mexican exports to China have barely tripled, from $310 million in 2000 to $895 million last year. China replaced Mexico as the United States’ second-largest trading partner.

In other words, China’s export sector has thrived, while Mexico’s has stagnated. Why? Is it that Chinese goods have reduced global demand for Mexican manufactures? Is it simply that China has lower labor costs? In a recent paper, Gordon Hansen of the University of California at San Diego attempted to pinpoint the causes of growth (or lack thereof) in the Mexican export sector. His conclusion: Competition from China and economic slowdown in the United States bear significant responsibility for slow growth in Mexican exports since 2000.

Still, some of the problems are internal to Mexico, and some of the potential remedies—expanding the supply of skilled labor, reducing transportation costs, improving logistics capabilities, improving communications infrastructure, and strengthening property rights and protections for investors—are readily available to Mexican policy makers. Last week’s Agreement for the Reciprocal Promotion and Protection of Investment, which clarifies protections for capital flows between the two countries, was a step in the right direction in that it will encourage bilateral direct investment (which may provide needed capital and expertise for Mexican industry, as well as expand the Chinese market for Mexican products). By itself, though, it won’t be enough to reverse the erosion of Mexico’s share of the global market for manufactures.

The United States is importing less oil from Venezuela, and China is buying more. Is Venezuela putting its resources where Hugo Chávez’s mouth is and using the country’s major export as a geopolitical lever? Or are U.S. imports just catching up with a 10-year decline in Venezuelan production?

The U.S. Energy Information Administration released April data on Monday, revealing that imports of crude and petroleum from Venezuela in the first four months of 2008 fell 10.7 percent from the same period last year—from about 1.3 million barrels/day to about 1.16 million b/d.

If we take a longer-term view of U.S. imports of Venezuelan crude and petroleum, the drop is even more significant: Venezuela sold about 1.6 million b/d to the United States in January–April of 2005, as it had since the mid-1990s (except in the oil strike years of 2000 and 2003). This means that Venezuelan sales to the United States have declined 30 percent over the past three years. Why?

AP’s Rachel Jones reports that the drop is likely due to three factors: (1) falling demand in the United States, (2) falling production in Venezuela, and (3) Venezuela’s decision to sell more oil to China. Does this make sense? Let’s take a closer look at the numbers:

1. Total U.S. oil imports in January–April 2008 dropped 2.5 percent compared with the same period last year (you can download the raw data here, or check out the Transpacifica digest below (after the jump). This, then, might explain one-fourth of the decline in imports from Venezuela.
2. There are no reliable numbers on Venezuelan oil production, but those that exist (for example, the monthly OPEC report) indicate at most a 2 percent drop in production from last year—which, like the change in U.S. demand, would explain only part of the 10.7 percent drop in sales. Over the past 10 years, however, Venezuelan production has declined about 25 percent—about the same as the change in U.S. imports over the past three years (according to EIA data here).
3. The AP report states that Venezuela now sends 250,000 b/d to China, up from next to nothing a few years ago. The story does not source this figure, and PDVSA, Venezuela’s state oil company, recently stated that China buys 398,000 b/d, as a result of increased CNPC operations. Venezuelan President Hugo Chavez has said that the country plans to sell China 1 million b/d by 2012.

Is China buying 250,000 b/d or more of Venezuelan oil? If so, does that purchase explain declining sales to the United States? Or would sales have declined anyway, as a result of falling production in Venezuela? What is the role of Chávez’s oil donations to countries throughout the region? Perhaps there are other explanations. If the United States wants control over how much oil it buys from Venezuela, the answer is critical. (more…)

From Sheila Dewan, “Chinese Students in U.S. Fight View of Their Home ,” The New York Times, April 29, 2008

Last year, there were more than 42,000 students from mainland China studying in the United States, an increase from fewer than 20,000 in 2003, according to the State Department.

That’s the question I pose in this new piece at Sinobyte, my blog that’s part of the CNET Blog Network.

This blog is often faced with the question of whether to post methods to access various sites which are inaccessible from China because of government controls. I want to turn the question to readers, who I hope will have some opinions. Help me decide whether to reinstate a workaround for Chinese Wikipedia.

Transpacifica readers are encouraged to chime in.  

This site’s redesign is still in progress as I finish an intensive Mandarin course this week and travel south to Hong Kong and possibly other destinations. For now, here’s a short piece of writing I put together for a publication that couldn’t use it in time to make it timely. As is, it’s a few days old.

BEIJING, August 13, 2007—On medians and buildings across Beijing, billboard clocks are counting down the seconds until the city’s Olympics. At 8:08 p.m. on 8/08/07—one year before the opening ceremonies—a new year of sorts was celebrated in Tiananmen Square. This will be a year of intense preparation for Beijing. Many of the city’s abundant construction sites will be replaced by fresh buildings, sports complexes, and subway stations. The changes leading up to the games will be as much a spectacle as the ceremonies and competitions themselves.

Late-comers to this month’s celebration were stopped by a massive police and security cordon and two closed subway stations. As fireworks erupted to mark the moment, thousands of people in the streets watched in relative quiet, many of them capturing images with their mobile phones. Some who were turned away took to strolling the perimeter of the adjacent Forbidden City, where guards stood at attention when a patriotic song could be heard in the distance.

Shortly after the fireworks in a nearby alleyway, men talked and ate meat skewers outdoors; the indoor glow of the televised ceremony was acknowledged, but unwatched. The Olympics are all but inevitable here, but as with any human city, much is not. Who could have predicted, after all, that the first days after the pre-anniversary would be met with the clearest air in weeks? Perhaps, rumor had it, the authorities were behind it.

I’m working on a big change for this site. For almost a year, I wrote from Washington, D.C. Over that time some of my goals have developed, and I have a more complete vision for what I’d like to create in this space. Right now I’m at Stanford University in California working many hours a day to learn Mandarin as quickly as possible. As I mentioned before, I’ll be moving to Beijing to sink myself further into studies and to learn about how people and countries interact in East Asia and across the Pacific.

In what spare time I have here, I’m working on a relaunch for this website, something which I expect to complete by the summer’s end. Some of the content may change, but the goal of providing insight into the relations among China, Japan, and the United States will not change.

While I’m working on the relaunch, I will have less time to write, but I think you will appreciate the new structure. And I am sure moving from the capital of the United States of America to the capital of the People’s Republic of China will provide ample subject matter.

—Graham

By way of apology for my recent lack of blogging, I have a little explaining to do. At this moment I am in transit between life as a think tank staffer in Washington, D.C., and a renewed status as a student. Later this month I will begin studying Mandarin Chinese in California, to continue in Beijing from late July onward. Blogging may continue to suffer during this series of travels. On the bright side, however, I will soon be able to add any insight I gain in China, where I will be in the full-time business of learning. Thanks, dear readers, for your interest. We should be back and better in no time.

I’ll be away from the computers until May 28. Until then, read a book!

I think it’s a little odd that the United States would be telling another country that they should set aside their differences with North Korea, given, you know, the Axis of Evil and the six-party nuclear talks. But that’s exactly what U.S. State Department spokesman Tom Casey did today:

“We recognize and have said that there are many tough issues and emotional issues in the Japanese and North Korean part of this,” Casey said of the multilateral negotiating process launched by the February 13 denuclearization agreement.

“We certainly appreciate those difficulties, but do want to see them meet and move forward and work on resolving them,” he said.

Reuters reports that the leaders of the United States, Japan, and China will meet in Hanoi:

China, Japan and the United States will “exchange views on bilateral ties and international and regional issues of common concern” on the sidelines of an Asia-Pacific Economic Cooperation meeting in Hanoi, the official Xinhua news agency reported in a brief dispatch.