More on Why Mexico Poised To Benefit From Yuan Move

Echoing the Marc Chandler’s comments yesterday, Andy Lees of UBS had some constructive things to say about the potential effect of a Chinese revaluation on Mexico.

  • Mexican Finance Minister welcomes the move because it will help Mexico’s export driven manufacturing industry.
  • Mexico is out-competing China for export share to the US. Its share of the USD427.7bn of goods and services the US imported in Q1 rose to a record 12.3%, up from 11% a year ago.
  • US companies prefer to outsource to Mexico over China, where share of exports to the US slipped to 17% from 18.4%.
  • Mexico has moved up the value curve of goods that it exports to those that require more complex manufacturing such as automobiles and appliances.
  • Mexico is also benefitting from the stronger Canadian dollar which has reduced Canada’s manufacturing competitiveness.
  • The average annual salary for Chinese manufacturing workers was CNY24,192 (USD3,543) in 2008, up 16% from 2007. Mexican’s 2009 salary was only slightly more expensive at MXN62,348 (USD4,823).

If any country benefits from a Chinese revaluation or continued U.S. – China trade tension, it is Mexico.

Also see the Bloomberg video with Senator Sherwood Brown of Ohio. While he talks a lot about regulatory reform and Wall Street, he also says the currency dispute with China is not over.

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