The impact of urban climate governance on FDI: empirical evidence from the construction of climate-adaptive pilot cities.

Based on data from Chinese cities between 2006 and 2022, this paper takes the pilot of climate-adapted cities as a quasi-natural experiment and applies a double dual machine learning method to comprehensively evaluate the effect of urban climate governance on foreign direct investment (FDI). The findings demonstrate that urban climate governance substantially enhances the inflow of FDI into China. Furthermore, heterogeneity analyses indicate that urban climate governance most significantly boosts FDI volumes in cities with high economic development level, coastal cities, cities with higher industrial structure and high institutional quality. Mechanism tests reveal that urban climate governance influences FDI inflows by enhancing supply chain resilience and advancing the level of climate-adaptive technology innovation. Extended analyses show that urban climate governance also improves FDI quality, yielding a "double dividend" of both growth and enhanced investment quality. Additionally, urban climate governance has significantly accelerated the pace at which Chinese enterprises are "going out" and increased the scale of their outward foreign direct investment. These findings provide useful insights for the government to promote climate adaptive governance and achieve a higher level of a new development pattern of openness.