Research On China’s Export Trade Potential With Latin American Countries

With the rapid development of comprehensive national strength as well as the economy, China and Latin American’s relations in the political, economic and other aspects is becoming more and more close. In recent years, under the slowdown of global economy environment, both China and Latin American countries face pressures to the economic decline. China’s economic and trade relations with Latin American countries are obvious affected by the external environment, trade friction,unreasonable trade structure and other factors. The bilateral trade cooperation prospect is even more uncertain. Based on this background, this paper will discuss the current situation and trade potential of China and Latin America.Firstly, this paper introduces the economic scale, economic growth and foreign trade situation of Latin American; further, this paper analyzes the export commodity structure and country structure of seven major Latin American countries. Since the beginning of 2003, Latin America’s economic growth jumped into a rapid growth phase, the economic level in Latin America has significantly improved its international status. However, in recent years, the economic growth rate in Latin American countries showed a significant decline. From the ranking of export value, Brazil, Mexico accounted for a relatively large proportion of Latin American countries, Venezuela’s export value also increased significantly. From the ranking of import value, the top three countries are Mexico, Brazil and Chile. The main trading partners of Latin American countries also have significant differences, Mexico and Central American countries’ exports mostly depend on US, and while South American countries mainly export goods to China and European countries. From the perspective of the commodity structure of export goods, in addition to Mexico, the other six countries mainly export minerals and fuel products rather than manufactured goods.This paper also discussed the bilateral trade profiles between China and Latin American countries and further discussed the trade volume, growth rate as well as the commodity structure and country structure of China’s export. According to the analysis, the level of trade cooperation between China and Latin America is relatively lower than other trade partners and the trade relations are still imbalance. From the commodity structure point of view, China mainly exports industrial products and import primary products with Latin American countries. China’s major trading countries with Latin American mostly gathered in South America. Trade frictions between China and Latin American countries have become an important issue that affecting bilateral trade.In order to conduct a more detailed analysis of bilateral trade between China and Latin America, this paper selects comparative advantage index, trade complementary index and trade combined degree index to make a quantitative analysis. The results show, trade complementary index of primary products between China and seven major Latin America countries is relatively low. In industrial products, in addition to the seventh class of products, most of the industrial products have revealed comparative advantage. In addition to several product categories, trade complementary between China and the seven Latin America countries is also very close, the trade complementary index value is much higher than primary products. From the combination of trade, the relation between China and Latin America continued to be closer with small fluctuations. In addition, this paper also selected trade data from 20 countries in Latin America and 30 major trading partners of China to build a modified gravity model of trade. The regression results showed: either from total exports or exports of manufactured goods, China’s exports to Latin American countries still have a room for development.Finally, this paper expects the future trends of corporation opportunities between China and Latin America under the new situation. This paper proposed several suggestions: China needs to enhance political and economic cooperation with Latin American countries, actively promote bilateral trade liberalization process, optimize the trade structure as well as lower commodity trade transportation costs. China and Latin America have to strengthen bilateral cooperation and achieve mutual benefit and win-win situation.