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Abstract

This paper examines the impact of cultural distance in general and the Confucius Institute Network in particular on cross-border flows of tourists, goods and investment in and out of China. We estimate a panel gravity model of inbound and outbound flows between 2004 and 2012. We find that the  presence of Confucius Institute(s) in the source country increases inbound tourism and equity flows and outbound export and FDI flows for China, while other measures of cultural distance have less of an impact.