Study Of China-Chile FAT’s Trade Effect

For a long time, China has always put the relations with countries of Latin Americaas an important component part of the strategy of its foreign economic relations. As theone of major countries of Latin America, Chile is not noly a member of APEC, but alsooccupys the favorable position in promoting the economic geography of Latin Americancountries and economic diplomacy. It seems to many Chinese professors, Chile is LatinAmerica’s “dragon”. Therefore, the establishment of China-Chile FTA has strategicsignificance for both countries. This paper studies its trade structure on the impact oftrade effect after China-Chile FTA’s establishment from trade competitive andcomplementary perspective, and tests its trade creation effect and trade diversion effectby gravity model. It is concluded that the trade creation effect is greater than the tradediversion effect, the gap is large.Through further analysis, it is found that China-Chile FTA exists many problems,such as some competition, the low level of trade,the inter-industry trade in the processof trade between two countries, etc.To solve above problems, this paper proposed manycountermeasures: Firstly, it should develop intra-industry trade to expand the tradecreation effect in the area; Secondly, developing the processing trade and upgrading thedomestic industry; Thirdly, speeding up the adjustment of the trade structure anddeepening the export level of product; Fourth, properly handling the trade competitionand complementary of the two countries; Finally coordinating relations with othercountries to reduce trade diversion effect.