Chinese FDI in Mexico collapsed 80% in 2025 to US$588.3 million, while nearshoring investment announcements fell 78% year-over-year in 1Q26, as USMCA uncertainty, US trade pressure and Mexico’s own tariff measures on Chinese imports create compounding headwinds for capital formation. The automotive sector faces the sharpest exposure, with manufacturers from both China and third-country nearshoring operators pausing commitments pending regulatory clarity. For industrial real estate developers, logistics operators, auto parts suppliers and state governments in Nuevo Leon, Veracruz and the State of Mexico, the pipeline is thinning even as previously announced projects reach completion.

Chinese FDI in Mexico fell 80% in 2025, dropping to US$588.3 million from US$3.017 billion in 2024. According to the China-Mexico Studies Center (CeChimex) at UNAM, uncertainty surrounding the USMCA review dampened capital flows from Chinese firms seeking a manufacturing foothold near the US market..

The sharp decline comes despite sustained corporate interest from Chinese companies, particularly in the automotive sector. “My impression is that Chinese automotive companies in particular are very interested in investing, but it has rather been the Mexican government that has requested patience,” said Enrique Dussel Peters, Coordinator, CeChimex.

A Measurement Gap and What It Reveals

The CeChimex figures diverge from official data published by Mexico’s Ministry of Economy, which recorded US$529.6 million in Chinese FDI for 2025, a figure close to the CeChimex estimate. The gap widens for 2024, when the official figure stands at just US$710.3 million against CeChimex’s US$3.017 billion.

The discrepancy stems from methodology. The Ministry of Economy tracks investment by the last country of origin, which overlooks capital that enters Mexico through third-party territories. CeChimex traces the actual source, producing figures up to 4.5 times higher than the official count. The difference matters for policymakers and investors assessing the real scale of China’s industrial presence in Mexico.

Over the past two years, 43% of Chinese investment in Mexico has been concentrated in the automotive and auto parts sector. The remainder is distributed across energy, manufacturing, electronics and machinery.

The automotive weight reflects a broader configuration: Mexico’s integration into North American manufacturing chains and its tariff-free access to the US market under the USMCA make it a platform for Asian companies seeking to reach US consumers. The Federal Reserve Bank of Dallas has noted that Chinese outbound investment has grown over the past decade, accelerating after the US-China trade war in 2018 and the USMCA’s entry into force in 2020.

Mexico’s Minister of Economy, Marcelo Ebrard, has pushed back against the narrative that positions Mexico as a Chinese manufacturing bridge, arguing that the United States and Canada carry greater exposure to Chinese capital. Deputy Minister, Luis Rosendo, reinforced that position at a recent APEC forum, stating that no instruction exists to distance Mexico from China and that cooperation remains active.

Mexico’s Regional Standing

The 2025 slowdown does not erase Mexico’s position as one of the leading recipients of Chinese investment in Latin America. Between 2020 and 2025, the country captured US$11.567 billion in Chinese FDI, representing 17.4% of the regional total, nearly on par with Argentina and second only to Brazil, which concentrated 30.2%.

Mexico led the region in transaction volume during that period, recording 98 projects, and ranked first in employment generation linked to Chinese investment, with 157,338 jobs created. The average project size, however, varied significantly. While each Chinese investment in Brazil averaged US$387 million, the figure in Mexico stood at US$127 million, indicating smaller and more fragmented operations.

Nearshoring Announcements Plunge 78% but Openings Surge

The Chinese investment picture feeds directly into the broader nearshoring investment dynamic. Nearshoring-related investment announcements in Mexico dropped 78% year-over-year in 1Q26, with just 22 deals totaling US$2.63 billion recorded, according to consulting firm Integralia,  a steep contrast to the US$14.645 billion logged across 402 announcements in the January-April 2025 period.

The decline in forward-looking commitments, however, runs against a surge in project completions. Facilities that opened during the same quarter represented US$4.951 billion in realized investment, nearly 2.5 times the volume recorded in the 1Q25, suggesting that projects announced during the 2023-2024 nearshoring wave are now reaching the operational stage.

Sectorally, the automotive industry accounts for 60% of current investment plans, with real estate and port-related projects making up an additional 30%. Among completed openings, 80% of the total capital deployed was concentrated in 80% of the projects inaugurated during the quarter. Nuevo Leon, Veracruz and the State of Mexico are the entities with the strongest near-term investment outlook, according to Integralia. Since Mexico’s nearshoring cycle began in 2023, the cumulative tally stands at 488 investment announcements totaling US$117.381 billion, with an associated employment projection of up to 252,884 jobs.