Mexico displaces China as the second country receiving remittances

Why does China receive less remittances?

China, the world’s factory, had a change in industrial policy that has made it less dependent on remittances.

Since 2021, a year after the arrival of the coronavirus, when Mexico reached the historic figure of 41.7 billion dollars in remittances, each year a new record has been recorded. For this year, it is estimated that 65.9 billion will arrive in the country.

“What happened with China was a change in its development model, they have increased the added value of their exports, there is a reindustrialization in China. This has lowered net migration flows, that is, immigration minus migration; The number of people leaving China has decreased,” explained Gabriel Pérez del Peral, an academic at the School of Government and Economics at the Pan American University (UP).

The second place as a recipient of remittances “is something to cry about because it reflects on you an economy incapable of generating jobs for all its inhabitants,” considered Gabriel Pérez del Peral.

On the contrary, Mexico has had low economic growth in recent years, going from average rates of 2% annually to less than 1% during the last year of Andrés Manuel López Obrador’s six-year term.

There has also been a drop in the gross domestic product per capita in the last five years of -0.2%, highlighted Pérez del Peral.

Another factor that has influenced the behavior of remittances in Mexico and China has to do with nearshoring and the trade war between the United States, in an attempt by the United States to reduce its dependence on the Asian giant.

“These are dynamics that are being seen not only in remittances, but in international trade, where Mexico has become the United States’ first trading partner. On the other hand, how the reassignment of the origin of manufacturing occurs, and that accompanies different migratory processes,” explained Sergio Castellanos, professor at the Tec de Monterrey Business School.

The trade war, added the Tec academic, has been going on for around 25 years, but the process has been interrupted by issues such as the war in Ukraine, the Brexitamong others.

There is a cultural factor that can help explain the increase in remittances to Mexico.

“One of the characteristics of the Latin culture is that they have very strong family ties,” which is why some second or third generation migrants – born in the US – continue to send remittances.