A Study Of The Complementarity And Competitiveness Of The Trade In Services Between China And Latin America

Since the mid-1990s, Latin America’s overall economic strength has continuallygrew. Currently, the per capita income of Latin America came behind the developedcountries. Also, plus the large amount of the Latin American population and awide-range market, Latin American has become one of the few markets in the worldwith great value. There is strong economic complementarity between Latin Americaand China. In recent years, China’s economic and trade relations with Latin Americahave achieved sustainable development, trade volume continues to create a newrecord, and significant increase showed in bilateral investment activity. Latin Americais becoming an important factor in Chinese foreign trade and investment activities.However, compared with trade in goods, trade in services is lagged behind. Itscooperation demands further deepening. At present, China has signed the bilateral freetrade agreement with Chile, Peru and Costa Rica, which will benefit the expansion ofservices trade between China and Latin America on a legal basis. Opening up theLatin America services market and increasing the service export towards LatinAmerica will help enhance the pull of economic and trade level, deepen the level ofcooperation and effectively reduce the trade friction. It has great practical andlong-term significance in optimizing our business structure, stabilize and expandexternal demand, maintain and improve the export-led economic growth effect.Therefore, Using trade competitiveness index, index of revealed comparativeadvantage and trade complementarity index on the data released by UNCTAD from2000to2011, this paper analyses the complementarity and competitiveness of thetrade in services between China and Latin America (include Argentina, Brazil, Chile,Columbia, Peru, Venezuela, Mexico).The results show that China has a greater competitive advantage in the fields ofcomputer and information, construction and other business services, while LatinAmerica has a greater competitive advantage in the fields of transport, tourism,communication and insurance. In service sector, China’s export has a significantcomplementery relationship with import of Brazil, Colombia and Peru. China’s importalso has asignificant complementary relationship with import of most Latin Americancountries. The complementarity is mainly in the fields of transportation, tourism and insurance. There is strong competition in service trade between China and two LatinAmerican countries (Argentina and Brazil), but the competition between China andother Latin American countries is weaker. In addition, the competition in service tradebetween China and most Latin American countries is weakening gradually.On the basis of the previous studies, this paper suggest relevant policyrecommendations: First, China should make full use of the complementarity of tradein services with Latin America, further expand the trade and cooperation in specificindustries that has greater complementary. At the same time, China should play itsadvantage in the fields of computer and information, other business services.Second, employ the advantage of Latin America’s superiority in technology andmanagement to strengthen the cooperation between China and Latin America infinancial, insurance and communication, enhance the competitiveness of ourtechnology and capital-intensive services. Third, through the bilateral free tradeagreement between China with Chile, Peru and Costa Rica, we should improve therelated system, introduce the support policies and export promotion mechanism,eliminate trade barriers and therefore promote the development of Sino-LatinAmerican trade in services.