When trade meets tradition: Unpacking cultural differences and their impact on China’s international trade

Bin Yu, Xingyu Zhong, Binam Ghimire and Niranjan Sapkota

International Review of Financial Analysis, 2025, vol. 106, issue C

Abstract: Amidst renewed trade tensions and heightened uncertainty in global financial markets, this paper examines the impact of cultural differences on China’s international trade. Departing from majority of prior studies treating cultural disparities as static, we employ dynamic models to capture cultural differences over 2001–2021 with its 44 key trading partners. We incorporate Hofstede’s six cultural dimensions and apply both linear and non-linear models. Our findings show a consistent negative effect of cultural distance on China’s trade. The non-linear analysis uncovers a S-shaped curve relationship, highlighting the subtle influence of cultural differences confirmed by robustness tests in export and import trades. We argue that the impact of trade tensions can be lessened by aligning with the evolving nature of consumer preferences and psychological factors.

Keywords: China; Consumer preferences; Consumer psychology; Cultural distance; Gravity model; Poisson pseudo maximum likelihood; Trade (search for similar items in EconPapers)
JEL-codes: C1 C5 F1 F14 P5 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1057521925005757
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:106:y:2025:i:c:s1057521925005757

DOI: 10.1016/j.irfa.2025.104488

Access Statistics for this article

International Review of Financial Analysis is currently edited by B.M. Lucey

More articles in International Review of Financial Analysis from Elsevier
Bibliographic data for series maintained by Catherine Liu ().