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.