A Study On How The Establishment Of The Confucius Institute Affects China’s Export Of Services ——Based On Data Of Confucius Institutes In 41 Countries

China launched the project of Confucius Institute in 2004 to promote the Chinese language,introduce Chinese culture and develop friendly relations with foreign countries.Over the past 20 years,Confucius Institutes have developed rapidly overseas.As of 2019,there were more than 1,000 Confucius Institutes and Confucius Classrooms in 162 countries across the continents.At present,scholars have carried out a large number of studies on Confucius Institutes,whose focus has gradually shifted from soft power perspectives such as cultural communication and cultural diplomacy to economic perspectives such as foreign trade and investment.However,existing studies mostly focus on the trade in goods,OFDI and crossborder mergers and acquisitions.By now,little study has explored the correlation between China’s export of services and China’s establishment of Confucius Institutes.Therefore,this paper conducts empirical research on how the establishment of Confucius Institutes will affect China’s services export,with a sample of 41 countries including the United States,the United Kingdom,Japan,Australia,Canada,France,etc.Data on the variables are from the UN Comtrade Database,Annual Development Report of Confucius Institutes,World Economics and Politics Dataverse,UNCTAD Database,etc.This paper is convinced that the establishment of Confucius Institutes has made progress in introducing Chinese culture and in reducing the cultural misunderstandings hence shortened the cultural distance between China and its trade-in-services partners.At the same time,the research to-date has indicated that the cultural distance between two countries is in reverse proportion to their trade volume.Therefore,this paper argues that the establishment of Confucius Institutes may promote China’s export of services through shortening the cultural distance between China and its trade-in-services partners.Based on the above theory,this paper adopts an extended gravity model of trade,finding that the establishment of Confucius Institutes as a key component of China’s soft power and culture dissemination strategy,can to a certain extent,play a significant role in facilitating China’s services export.This finding remains significant upon the endogeneity test and the robustness test.The mechanism test reveals that the cultural distance between China and its trade-in-services partners is inversely proportional to the total number of Confucius Institutes and Classrooms within the latter;as are the cultural distance and the total volume of China’s export of services.Therefore,this paper feels confident to conclude that the establishment of Confucius Institutes can shorten the cultural distance between China and its trade-in-services partners hence ultimately promote China’s export of services.Furthermore,this paper examines if the above-stated promotion effect displays heterogeneity.The 41 countries in the sample are re-grouped according to their membership in the Belt and Road Initiative（BRI）,GDP per capita and level of economic freedom.The heterogeneity analysis suggests that the abovestated promotion effect is largely universal,yet its magnitude varies among countries with different levels of per-capita GDP and economic freedom.More specifically,the effect remains statistically and economically significant to both BRI countries and non-BRI countries.And in countries with high levels of per-capita GDP and economic freedom,the above-stated promotion effect becomes more salient than the sample average.In view of the above results,this paper proposes policy suggestions on（1）how to help the Confucius Institutes to shorten the cultural distance between China and its trade-in-services partners;（2）how to give full play to the promotion effect of the Confucius Institutes in China’s services export.In order to shorten the cultural distance between China and its trade-in-services partners,this paper suggests that Confucius Institutes actively develop MOOCs to facilitate foreign learners’ access to Chinese-learning resources.Confucius Institutes should strengthen its cooperation with domestic cultural groups to carry out a variety of cultural activities and introduce Chinese culture in all aspects.In order to smooth the external development environment,China should weaken the role of the government and welcome efforts from the society while establishing Confucius Institutes project.In countries that are culturally more distant,China should encourage nongovernmental exchanges and visits.In terms of promoting China’s services export,this paper suggests that China should increase the investment in overseas education programs to promote the export of educational services.Meanwhile,China shall establish Confucius Institutes with specialties based on the characteristics of service import and consumption in host countries.