China's Largest Investment In Latin America? Chinese Construction Firm To Develop Industrial Park In Mexico

A state-owned Chinese construction company brokered a preliminary deal with government officials in the western state of Jalisco on Tuesday to build an industrial park, Reuters reported. The project could become China’s largest investment in Mexico, which has the second-largest economy in Latin America.

Liu Yueping, the Americas chief of China Communications Construction Company (CCCC), signed a memorandum of understanding with the Jalisco officials to launch a six-month feasibility study that will identify a location and determine which manufacturing companies will be involved. "This is going to be a key source of jobs that will have an impact not just in our state, but also nationally," Jalisco governor Aristoteles Sandoval said in a statement. “Capital goes where the market conditions are. Jalisco has the geographical zone, talent and human capital to be competitive in a global market.”

The site will fill approximately 1,235 acres in Guadalajara, the state’s capital, with the cost of the land split evenly between the Jalisco government and the Chinese, according to Jalisco officials. But the Chinese will cover the full costs of the park’s development, they added.

The company chose Jalisco due to its strategic location between Manzanillo, Mexico’s largest cargo port, and central Mexico, which is well-connected with the United States, the Financial Times reported. On Tuesday, Sandoval called the park a “Chinese port of entry into the U.S.”

The amount of the Chinese investment, the park’s location and the manufacturing companies that will participate will all be determined after the feasibility study is conducted. But similarly sized industrial parks funded by global investments have cost sums that range from hundreds of millions of dollars to more than $1 billion, according to Reuters.

Mexico has grown more attractive to Chinese manufacturers due to its cheaper wages and proximity to the U.S. The average nominal dollar wage in China was $764.30, compared to just $636.60 in Mexico, according to a recent report by Bank of America Merrill Lynch Global Research.