Nigel Bickle, head of INZ, said the agreement would encourage more high-value Chinese tourists to visit New Zealand and stay here for longer.
"Inbound tourism is one of our most important industries and is worth around $9 billion a year," he said.
China has now overtaken the UK as the second largest source of overseas visitors to New Zealand with more than 200,000 arrivals in the year to February 2013.
Air New Zealand chief executive Christopher Luxon said the agreement, which comes into effect from May 1, would lead to further growth in tourism.
"INZ has said it will endeavour to process all visitor visa applications under this scheme within five working days.
"This sort of visa facilitation scheme will be of great benefit to our frequent flyers and encourage them to come to New Zealand."
The agreement comes after Prime Minister John Key last night launched a report into the Chinese tourism market which found visa processes should be streamlined to encourage travel by "low risk" high-spending visitors or risk losing them to rival destinations.
The China Market Review says striking the balance between immigration risk management and attracting visitors is vital to New Zealand.
The China visitor market is already worth $651 million a year and Key, who is also Tourism Minister, has said the annual number of Chinese tourists could grow five-fold to one million over the next five years.
When the agreement with China Southern was first floated, NZ First Leader Winston Peters highlighted concerns about the risk of criminals using the visas to get into the country.
Peters has criticised the deal as weakening border controls and produced Immigration NZ documents which showed misgivings among senior managers.
But Bickle said the agreement with China Southern, which was re-signed yesterday, had been running smoothly and had been used by almost 100 Chinese tourists.