Taking the dynamic panel data of east, middle, and west parts of China from 1997 to 2008 as sample, this essay analyzes how FDI affects China’s trade effect regionally. From the analysis, it can be found that different region received different effect. In the east part of China, FDI creates marked trade creation effect for export and substitution effect for import, while middle and western China are less influenced. Then, this paper analyzes the reason that trade effect isn’t obvious in western region and puts forward some suggestions.