Short-term and long-term effects of Chinese and global economic policy uncertainty and geopolitical risks on Chinese tourism

Abstract

This paper focuses on the short-term and long-term effects of Chinese and global economic policy uncertainties (CNEPU and GEPU) and geopolitical risks (CNGPR and GGPR) on the growth of inbound tourism in China. Using the ARDL and NARDL models as well as a monthly series of Chinese inbound tourism revenue and arrivals, we observed several interesting empirical findings. We find significant effects of CNGPR, GGPR and GEPU on the growth of inbound tourism in Hainan Province and even in China nationwide, while the impact of CNEPU is limited. Among these influencing variables, GEPU always has a significant long-term negative impact on inbound tourism growth (both revenue and arrivals). CNGPR has a significant short-term negative impact on inbound tourism growth in China nationwide; however, it has a significant long-term negative impact on inbound tourism growth in Hainan Province. In addition, the estimation results of the NARDL model further reveal the significant short-term effects of GEPU and GGPR on the growth of inbound tourism arrivals in Hainan Province and even in China nationwide, and these short-term effects are always significantly asymmetric. Specifically, the negative components of GGPR always influence the growth of inbound tourism arrivals more strongly. However, the positive components of GEPU influence inbound tourism arrivals more strongly in Hainan Province, but the negative components of GEPU influence the growth of inbound tourism arrivals more broadly in China.