Title：Cross-border Travel, “Soft Information”, and International Trade

Authors：Bingzhan Shi, Zhi Xiong

Abstract：This paper focuses on the economic effect of cross-border travel, and discusses how it promotes the development of Chinese import trade through the transmission of “soft information”. In terms of identification strategy, this paper uses the Chinese visa-free entry policy as a verifiable quasi-natural experiment, and adopts the Difference-in-differences (DID) method to identify the impact of cross-border travel on the imports of Chinese goods. The results of the study show that the facilitation of cross-border travel increases firms’ import along the extensive margin, and promotes general trade, high-tech products and capital goods trade. The mechanism is the decline of information cost due to “soft information” flow, which reduces search cost to screen high-quality trade relations and trust cost to continuously expand the positive trade effect. Furthermore, the impact benefits from the complementarity of modern information and communication technology, and from the facilitation of domestic travel. This study indicates that “soft information” is an important resource in the digital economy era, and the flow of people is vital for the development of high-quality opening-up.

Keywords：Cross-border Travel, “Soft Information”, Import Trade, Visa-free Entry Policy