Energy insecurity and tourism sustainability in China: Challenges and policy responses

Abstract

Tourism has become an essential industry due to its significant contribution to the growth of the destination economies. Energy is considered, inter alia, a major promoter of tourism, whereas energy insecurity (EIS) is believed to be a severe threat to sustainable tourism. This paper employs the fully modified ordinary least squares (FMOLS), the dynamic ordinary least squares (DOLS), and the Canonical cointegration regression techniques to examine the impact of economic growth (EG) and EIS on tourism in China for the period 2001 to 2017. The result demonstrates that economic growth is a significant promoter of tourism in the long run, as it supports the growth-led tourism hypothesis for China. The paper also finds that energy insecurity is a serious threat to sustainable tourism, as revealed by the significant negative relationship between EIS and tourism in the long run. Therefore, by reducing EIS, China can achieve sustainable tourism. The findings are robust to various estimation methods, including fully modified ordinary least squares, DOLS, and Canonical cointegration regression. Further, Juodis, Karavias, and Sarafidis’s Granger non-causality test shows that a unidirectional causal relationship exists between EG, EIS, and tourism. By developing strategies that can boost EG and reduce EIS, policymakers will ensure foreign currency earnings and also promote sustainable tourism.