Does visa facilitation promote FDI in producer services? Evidence from China’s transit visa-free policy

This study investigates how entry facilitation for foreign visitors influences foreign direct investment (FDI) in producer services using China’s transit visa-free policy as a quasi-natural experiment. Using a city-industry-year panel dataset for 2009–2024 and a difference-in-differences framework with high-dimensional fixed effects, this study demonstrates that the policy significantly promotes FDI in producer services by facilitating inbound visits and mitigating information frictions. The impact is more pronounced in cities characterized by higher human capital endowments, more extensive industrial client bases, and superior hospitality infrastructure.