China’s Tourism-Led Foreign Direct Investment Inflows

As one of the important tourism countries in the Asia-Pacific region,China is rich in tourism resources.Since reforming and opening,inbound tourism has been developed rapidly.Inbound tourism can provide some useful information for multinational investors which can reduce the uncertainty of investment,thus promoting the inflow of FDI.Meanwhile,the inflow of FDI can not only promote the development of various industries,thus stimulating economic growth,but also attract new inbound tourists through the word-of-mouth business communication.Therefore,in order to boost the inbound tourism,we should comprehensively study the relationship between inbound tourism and industry-wide FDI,and figure out whether the enhancement of inbound tourism will bring about the non-tourism sector’s FDI growth,and then put forward relevant policy suggestions.Based on the annual data of China from 2000 to 2014,this paper applies the dynamic panel model to study the relationship between inbound tourism and foreign direct investment(FDI).Compared to previous literatures,our analysis is not limited to the study of FDI in single tourism sectors such as hotels and restaurants,but takes general FDI into consideration.The empirical results show that the growth of inbound tourism can not only promote FDI flow into the tourism industries,but also increase the inflows of FDI to other sectors.In other words,the flourished inbound tourism may have spillover impacts of FDI on non-tourism sectors.It’s also indicated that the two policies of inbound tourism improvement and inward FDI promotion are complementary.Therefore,I believe coordination can maximize the effect of policies,because the two policies may coordinate with each other to achieve economic growth targets.