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Mexico Warns US of Alternatives on Trade, Points to China

FILE - Trucks wait in the queue for border customs control to cross into the U.S. at the World Trade Bridge in Nuevo Laredo, Mexico on Nov. 2, 2016.
FILE - Trucks wait in the queue for border customs control to cross into the U.S. at the World Trade Bridge in Nuevo Laredo, Mexico on Nov. 2, 2016.

Mexico sent a stark message to U.S. President Donald Trump on Thursday, saying an upcoming visit to China in September made it clear Latin America's No. 2 economy "has lots of other alternatives" amid tense trade negotiations.

Mexico is grappling with Trump's desire to renegotiate the North American Free Trade Agreement (NAFTA) that underpins its economy, prompting the government to try and diversify away from the United States, which takes 80 percent of its exports.

"We will use [the China visit] geopolitically as strategic leverage," said Guajardo, answering questions from reporters. "It sends the signal that we have many alternatives."

Mexico has tried to deepen commercial links with China for years, and President Enrique Pena Nieto had hoped a Chinese high-speed train contract would presage more investment.

However, the train deal was scrapped in 2014 after Pena Nieto and his then-finance minister became embroiled in a conflict-of-interest scandal.

The incident soured relations, but the election of Trump, who has voiced opposition to free global trade, has brought them closer again.

Mexico runs a sizeable trade deficit with China, and the government could face resistance from Mexican manufacturers to opening up to China, as the two often compete directly.

A senior Mexican diplomat in Beijing said Mexico was not sending any top-level representatives to China's "One Belt, One Road" meeting in Beijing this weekend.

However, he added bilateral meetings between senior Mexican officials and their Chinese counterparts were planned throughout the year, saying China's Deputy Minister of Land and Resources was currently in Mexico.

He said it was likely Guajardo would meet his counterpart in Hanoi as part of an Asia-Pacific Economic Cooperation (APEC) trade minister's meeting on May 20-21.

Mexico was also looking to send senior officials to a World Economic Forum gathering in Dalian in late June.

Guajardo did not give details of what trip to China in September he was referring to, but the diplomat said it was to the CIFIT summit in Xiamen.

"High-level contact is very frequent," said the diplomat, who was not authorized to speak publicly.

Guajardo was speaking after Trump indicated he wanted to get the U.S. trade deficit with Mexico down to zero. The minister said expanding bilateral commerce, not restricting it, was key to rebalancing the U.S.-Mexico trade deficit.

Nonetheless, Guajardo said the deficit is not a good way of measuring the strength of a trading relationship.

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