Professor Shi Bingzhan: Cross-Border Travel, Soft Information and International Trade

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(Correspondent: Zhong Yiming) Recently, the paper completed by Prof. Shi Bingzhan and coauthored by PhD Candidate Xiong Zhi was published in The Journal of World Economy, 2nd issue of 2023. The paper is entitled “Cross-Border Travel, Soft Information and International Trade”.

Since the accession to the WTO, China has become increasingly open, with frequent cross-border flows of goods and capital. Up to now, China has been the world’s largest trader of goods and the largest foreign capital inflowing country. However, a basic fact that is often overlooked is that, the scale of cross-border travel in China is also considerable: 163 million passengers entered mainland China in 2019, second only to the United States at 166 million. Among them, the number of foreign arrivals has reached 49.11 million. If it is compared with the population of 23 provinces and 5 autonomous regions in China, the number of foreign arrivals will rank 12th, slightly higher than the total population of Yunnan Province. From the longitudinal dimension of time, the number of inbound visits increased by nearly 213 times compared with 229,600 in 1978. However, there is little literature examining the economic effects of cross-border travel in China, which means a serious lack of scholarly attention on this topic.

This paper focuses on the research field of the economic effect of cross-border travel, and specifically discusses how cross-border travel promotes the development of Chinese import trade through the transmission of soft information. Taking Chinese visa-free-entry policy as a verifiable quasi-natural experiment, the paper uses difference-in-differences (DID) to identify the impact of cross-border travel on Chinese goods import. Results find that the facilitation of cross-border travel increases the enterprises’ import value along the expansion margin, and promotes general trade, high-tech products and capital goods trade. This mechanism is the decline of information cost due to soft information flow, which reduces search cost to screen high-quality partnerships and trust cost to continuously expand the positive trade effect. Further, this impact is benefit from the complementarity of the modern information and communication technology, and the domestic travel facilitation. The conclusion of this paper means that soft information is an important resource in the digital economy era, and the flow of people plays a vital role in the development of high-quality openness.

The Journal of World Economy is an academic journal jointly sponsored by the Chinese Academy of Social Sciences, China World Economics Association and the Institute of World Economics and Politics. It was founded in 1978 and is one of the earliest world economic publications in China.