1. Donald Lien

2. + This is an ongoing project since 2012 + Four papers and a Chinese book have been published + A couple of projects are under way at this moment + An English book titled “Economic Dimension of Soft Power: The Case of Confucius Institute” is in progress

3. + CI as a project + Cost: accounting cost and opportunity cost + Benefits: direct and indirect benefits

4. + Improve understanding of Chinese language and culture + Comfort and familiarity + Expertise + Reduce transaction cost

5. + Promote likeness toward China + Better understanding language and culture does not necessarily improve likeness + McDonald’s in Mideast + Soft power

6. + Hard power (carrot and stick) vs. soft power + Is culture or language a soft power? + Is CI a soft power? + How does CI improve soft power? + How to measure CI soft power?

7. + Bilateral economic relationships between two countries include + Trade + Investment + Tourism + Portfolio flows + Foreign aids

8. + CI produces grease (familiarity and comfort) + CI as a medium (information platform) + Both may be realized in short term + Soft power impact is likely a long term outcome

9. + CI affects bilateral economic relationships + Bilateral economic relationships affects CI establishment + Causation determination

10. + The flows between two countries are positively related to their GDPs and negatively related to their distances + Geographical distance + Cultural distance + Language distance + Effects of CI

11. + CI increases China’s export to CI host countries, particularly the third world countries + CI increases US exports to China + CI increases China’s FDI (foreign direct investment) to CI host countries, particularly the third world countries

12. + CI increases tourism to China + Particularly business and worker tourisms + There is no effects on international portfolio flows

13. + Goethe Institute displays significant trade effects, particularly when the host country is a developed country + British Council does not display any effect + Possible explanations: both have a long history; different structure; data difference