How Mexico Can Exploit The U.S.-China Showdown

If Mexico could forge a clear vision of its business interests, the showdown between the United States and China would present it with some major trading and strategic opportunities.

Photo of U.S. ​Vice President Kamala Harris and Mexican President AMLO walking in the couryyard of the National Palace during in Mexico City on June 8

U.S. Vice President Kamala Harris and Mexican President AMLO on June 8

Carlos Ramos Mamahua/Presidencia/Planet Pix/ZUMA
Luis Rubio


MEXICO CITY — New Zealand rugby players famously perform a Maori dance called the Haka before each match. Its gesticulations, grimaces and threatening noises are meant to intimidate adversaries, though most see it as nothing more and nothing less than a celebration of heritage. I wonder if after the Donald Trump presidency and the Afghan débacle, the world will see the United States, the erstwhile leader of the free world, with the same rational distance.

Trump's election surprised the world, and his refusal to moderate his discourse once in the White House stretched the surprise out for four years. His successor, Joe Biden, though seeking to remove everything relating to Trump, still shares a common objective: to change the basic premises that have marked the U.S. since 1945.

Trump was elected in part for the effects of globalization and technological changes, which made ordinary folk feel increasingly vulnerable. Biden was elected as a reaction to Trump, but has similar goals and the same inward-looking vision that is bound to reduce America's global presence.

Recreating the British Empire

These changes have curiously coincided with China's ascent as a global power. Its economy is now almost as big as the United State's, and its leaders have exhibited an exceptional sense of strategy. In the U.S. in contrast with their predecessors of the late 20th century, the last two presidents have shown they do not even believe strategic thinking is necessary. Their way is to react to circumstances, even spontaneously it seems, as shown in the shambolic departure from Afghanistan. The objective was probably the right one, but its implementation was pathetic.

Mexico could move into the enviable position of being a natural alternative in both those nations.

In contrast, the international affairs specialist Parag Khanna describes China's systematic rise as the recreation of the British Empire, not through colonies, but infrastructures. China's expansive Belt and Road project is certain to threaten the weight and power of the U.S., whose leadership seems unable, or unwilling, to see and react to what is happening.

Photo of a worker at an Audi car factory in Chiapa, Mexico.

A car factory in Chiapa, Mexico

Carlos aranda

Supplanting Chinese imports

For many here in Mexico, this is seen as an opportunity to reduce the depth of our ties with the U.S. and start diversifying our commercial relations. As the Mexican analyst Luis de la Calle observes, the commercial and political confrontation between the two superpowers opens up opportunities for Mexico to "reaffirm its position as a credible competitor in the two leading economies."

Mexico can supplant Chinese imports in the U.S. market, and attract new sources of foreign investment. It is an enormous opportunity, but requires a concerted strategy to move into the enviable position of being a natural alternative in both those nations. It won't last forever.

Nothing is written in stone.

The wider framework for Mexico's future in a changing international setting means observing the implications in coming years of China's ascent and of possible political changes in the U.S. The interaction of the two powers will determine the panorama in which we'll be moving. China has exceptional strategic leadership and an extraordinary ability to adapt, while its political nature means it can forge ties democratic states would not even contemplate.

Yet one cannot underestimate the economic and political challenges it will also face in coming decades. The Americans, for their part, find themselves lacking clear-sighted leadership and are sharply polarized. That may entail swings in domestic politics before they regain their traditional, strategic clarity as they so often have in the past. It is easy to underestimate the U.S. at this moment, but their open political system allows them to rebound swiftly. Nothing is written in stone.

Mexico has exceptional opportunities if it can deftly exploit the divisions between the U.S. and China. But that would require vision and leadership, which hasn't been one of our most notable traits. Separately, the fading liberal vision, at least in economics, may prove a formidable obstacle to grabbing this opportunity.

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Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum


SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.

It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

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