Has China’s Free Trade Zone policy promoted the upgrading of service industry structure?

As the pillar industry of China’s national economy, the service industry has always experienced a lag in structural upgrading. As an important measure of China’s institutional innovation, China’s Free Trade Zone (FTZ) policy is of great significance for promoting the development of the service industry. Based on the panel data of 185 prefecture-level cities in China from 2010 to 2019, this paper empirically tests the impact of the FTZ policy on the upgrading of service industry structure by using the progressive difference-in-differences model. The results show that the FTZ policy can promote the upgrading of service industry structure, and the effect is enhanced with the extension of time. The heterogeneity test shows that the impact of the FTZ policy on the structural upgrading of the service industry is mainly reflected in promoting the development of the information service industry as well as the leasing and business service industry. The transmission mechanism test shows that the FTZ policy can promote the structural upgrading of the service industry by improving the level of trade facilitation and investment facilitation.