China and Chile have signed a free-trade agreement, Beijing's first in South America.
Chile's President has hailed the deal as a real breakthrough
The deal will give China better access to Chile's extensive natural resources, such as copper, while Chile will be able to target the vast Chinese market.
Chilean president Michelle Bachelet said the deal was a "milestone" in the country's economic expansion.
China is rapidly increasing trade deals in the developing world to help fuel its surging demand for raw materials.
Chile is an ideal free-trade partner for Beijing, as while China is now the world's biggest consumer of copper, Chile is the largest producer of the metal.
"We are convinced that a treaty of this nature will be to the benefit of most Chileans," said Ms Bachelet.
The treaty will free 92% of Chile's exports to China from customs tariffs, and remove Chilean tariffs on 50% of China's exports.
Other Chilean exports will remain subject to ongoing tariffs for between five and 10 years.
Chilean exports to China totalled $4.6bn (£2.4bn) last year, while those moving in the other direction amounted to $2.5bn.
The deal between China and Chile comes as a strike continues to hit production at Chile's largest copper mine.
Staff at the Escondida facility, which is majority owned by Anglo-Australian mining giant BHP Billiton, have walked out in a dispute over pay.