Inbound tourism and bilateral trade, evidence from China

This paper examines the nexus between inbound tourism and bilateral trade in the context of China. Within a gravity model framework, both the cointegration approach and fixed-effects panel technique is applied to conduct the research. The long-run equilibrium relationship between China’s inbound tourism and its bilateral trade flows is ascertained through cointegration tests. Results also show that foreign tourists are positively associated with trade flows between China and its tourism origin countries, while inbound leisure tourists to China have a larger effect on bilateral trade than business tourists. In addition, China’s export activity is more elastic to inbound tourism than is its import activity. These findings reveal important patterns that are useful for policymakers to promote international trade regarding the different influences of inbound tourism. Further, this study extends research on China’s inbound tourism and bilateral trade by providing new empirical developments.