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Mexico’s presidential frontrunner said US trade ties were “fundamental” as she vowed to encourage companies to shift operations to her country to reduce their supply chain links with China.
Speaking to financial sector leaders, Claudia Sheinbaum struck a contrast with her combative mentor, leftist President Andrés Manuel López Obrador, by promising consensus-based policies if she wins the June vote.
Sheinbaum, a former mayor of Mexico City who holds a double-digit lead in the polls, signalled the importance of the US trade relationship as concern has grown in Washington over increasing Chinese investment in Mexico.
“The trade agreement [USMCA] represents enormous potential for the Mexican economy, not just what it represents today, but also . . . in the future with nearshoring,” she said in Acapulco, a coastal city ravaged by violence and still recovering from a record-breaking hurricane in October.
Mexico last year became the top US trading partner as it benefited from companies wanting their supply chains closer to their customers. Its 2,000-mile border with the US, broad manufacturing sector and relative stability make it a top potential beneficiary of the trend.
“We need to get into Mexico. That’s the mandate that a lot of infrastructure funds, private equities are looking at,” said Raúl Martínez Ostos, director of Barclays Mexico. “You’ve got the big CEOs of the biggest funds in the world coming.”
The fervour is yet to transform the country’s stable but long-disappointing growth, though. Foreign direct investment is robust but below records as a percentage of gross domestic products. López Obrador’s six-year term is set to end with almost no GDP per capita growth.
Opposition politicians and many economists say the government’s policies are to blame. Presidential candidate Xóchitl Gálvez, a self-made businesswoman turned politician, said López Obrador’s Morena party hated the middle classes and did not respect rule of law.
“Six more years of Morena and nearshoring passes us by,” she said to a receptive audience, which broke out into applause multiple times during her speech. “Some people are satisfied with mediocrity, I’m not mediocre.”
López Obrador, a deft political communicator with approval ratings of 55 per cent, has pressured, expropriated and criticised companies who clash with his priorities of large infrastructure projects and state-controlled energy.
Mexico’s biggest companies have broadly prospered though, with the country’s banks reporting record profits thanks to strong consumer demand and high interest rates. López Obrador has weakened regulators and changed the rules in sectors such as transport and energy, but mostly left banking untouched.
“You’ve treated me very well, with respect and I think it’s been mutual,” he said in Acapulco on Friday.
Sheinbaum, 61, has run a disciplined campaign promising broad continuity of López Obrador’s project, while saying that decision-making would be based on data. She cautiously laid out a few areas of difference on Friday, such as reviewing the vast expansion of the military’s economic power and that she was open to a “consensus” fiscal reform if necessary.
The next leader will inherit big economic challenges, including turning around state oil firm Pemex, restoring confidence with foreign investors in the energy sector and cracking down on organised crime.
At the banking convention, some attendees said they were convinced Sheinbaum would be more pragmatic than the incumbent. Others were nervous about what six more years of Morena government would mean for Mexico’s checks and balances.
“Claudia is very scripted,” one senior banker said. “We don’t really know who she is yet.”
