Environmental degradation has been a growing concern since Rachel Carson's "Silent Spring" (1962). The 1992 Earth Summit highlighted sustainable development, leading to the UN's 17 Sustainable Development Goals (SDGs) in 2016. Ecotourism, aiming for environmentally friendly tourism, emerged as a crucial aspect of sustainable development. Its benefits include curbing carbon emissions, improving public health, preserving natural resources, creating green jobs, and fostering sustainable practices. However, progress has been hampered by internal (political landscape) and external (foreign direct investment, FDI) factors. This study focuses on China, the world's largest carbon dioxide emitter and a nation undergoing significant economic and political changes. China's socialist orientation and emphasis on international development makes understanding the role of political freedom and FDI crucial for its ecotourism development. This research uniquely compares various forms of freedom (business, finance, politics) and assesses FDI's impact on ecotourism in China, aiming to understand the significance of internal and external factors in its development.

Existing literature highlights the multifaceted role of ecotourism in driving sustainable development, particularly in the post-pandemic era. Studies emphasize its potential for green economic recovery and digitalization (Hosseini et al., 2021). Research underscores nature tourism's contribution to resource preservation and reduced fossil fuel consumption (Ruhanen, 2019; Sorensen and Grindsted, 2021). The role of ICT (Tiago et al., 2021) and blockchain technology (Erol et al., 2022) in enhancing sustainability within the tourism sector is also examined. Other research focuses on the positive long-term impact of ecotourism on the green economy (Shang et al., 2023), and the importance of legal documentation, social awareness, and infrastructure (Heshmati et al., 2022). The relationship between political openness and environmental prosperity is also explored, with studies indicating that political risk negatively impacts green technological progress and sustainable projects (Yang et al., 2022; Hunjra et al., 2022). Regarding FDI and sustainable development, some studies indicate that FDI can increase fossil fuel consumption (Adedoyin et al., 2020), while others highlight its role in sustainable tourism investments (Nestico and Maselli, 2020; Tajer and Demir, 2022; Zhang et al., 2022), green technology transfer (Ofori et al., 2023), and the importance of government incentives (Thompson, 2022). This study aims to address the gap in research concerning the combined influence of political openness, FDI, and ecotourism in China.

This study uses time-series analysis to examine the relationship between FDI, political openness, and sustainable tourism in China from 1985 to 2019. The Tourism Sustainable Development Index (Zhang et al., 2023) is used as a proxy for ecotourism, with FDI inflows and the Liberal Democracy Index serving as proxies for FDI and political openness, respectively. Control variables include trade openness, financial openness, renewable energy consumption, and green tax. The study hypothesizes positive relationships between FDI, political openness, trade openness, financial openness, renewable energy consumption and the ecotourism index. The econometric model is represented by equation 1: LTOSUS_t = a₀ + a₁LFDI_t + a₂LLDI_t + a₃LTROP_t + a₄LFIOP_t + a₅LREC_t + a₆LGRTAX_t + ε_t (1). The analysis includes a correlation matrix to check for multicollinearity, unit root tests (Augmented Dickey-Fuller and Phillips-Peron) to determine data stationarity, an ARDL bounds test to assess co-integration, and ARDL estimation and Error Correction Model (ECM) to estimate short-run and long-run effects. A robustness test using a composite ecotourism potential index (Ocampo et al., 2023) and Generalized Method of Moments (GMM) was also conducted.

The correlation matrix showed no significant multicollinearity. Unit root tests revealed mixed orders of integration. The ARDL bound test confirmed long-term co-integration. The ARDL estimations (Table 6) show that FDI has only a long-term positive impact on China's ecotourism index (0.01% increase for a 1% increase in FDI). The political openness index significantly and positively impacts ecotourism in both the short-term (0.32%) and long-term (0.53%). Trade openness also showed a positive effect (0.09% short-term, 0.18% long-term). Financial openness showed positive effects in both the short-term (0.24%) and long-term (0.23%). Renewable energy consumption positively affected ecotourism, while green tax did not show a significant impact. Diagnostic tests (Wald and Breusch-Pagan) indicated no heteroscedasticity. Robustness tests using a composite ecotourism index and GMM estimation (Tables 7 & 8) confirmed the key findings.

The findings highlight the crucial role of political openness in boosting ecotourism in China, exceeding the impact of FDI and financial openness. The long-term impact of FDI suggests that its effects are not immediate but develop over time, possibly due to the time lag in implementing large-scale projects. The positive relationship between financial openness and ecotourism aligns with the notion that broader financial access enhances social inclusion and increases demand for ecotourism services. The insignificant role of green tax suggests that alternative policies are needed to incentivize sustainable practices in the ecotourism sector. The positive impact of renewable energy highlights the importance of investments in sustainable infrastructure.

This study demonstrates the significant influence of political openness and the long-term impact of FDI on ecotourism development in China. Political openness stands out as a primary driver, exceeding the influence of commercial and financial openness. Future research could investigate regional variations within China, explore the impact of COVID-19, and examine the feasibility of cryptocurrency adoption in ecotourism payments.

The study is limited to the analysis of China's national-level data and may not capture regional variations. The use of proxies for ecotourism and political openness might introduce some measurement error. The time series analysis is susceptible to structural breaks and other time-series related issues, which should be addressed in future studies by applying appropriate methodologies.