How China’s Digital Economy Powers Urban Green Growth and Cross-Regional Impact

A team of researchers from the School of Business at Shandong University and the School of International and Public Affairs at Shanghai Jiao Tong University has conducted a landmark study exploring how digital innovation is shaping green urban development in China. Analyzing data from 280 cities over the 2011–2020 period, the study offers compelling evidence that the digital economy not only enhances a city’s green development efficiency (GDE) but also exerts powerful spillover effects on surrounding regions. Using a combination of spatial econometric models, social network analysis, and multi-scale geographically weighted regression (MGWR), the researchers dive deep into how digital infrastructure, innovation, and industrial transformation are enabling a more sustainable urban future.

The Green Advantage of Going Digital

At the heart of the study is the recognition that the digital economy, driven by technologies like artificial intelligence, blockchain, and cloud computing, offers a new, less resource-intensive model of development. Unlike traditional industries that depend heavily on fossil fuels and raw materials, the digital economy optimizes resource use, streamlines logistics, and reduces carbon footprints through innovations such as smart power grids, e-commerce, and precision data monitoring. It transforms production and consumption systems, allowing businesses and consumers to make cleaner, faster, and more efficient decisions. However, the study acknowledges the dual challenge: while digital transformation boosts green outcomes, it also demands significant energy input, mainly derived from fossil fuels in China, which could offset some environmental gains if not managed carefully.

Eastern Powerhouses and the Siphon Effect

One of the most striking findings of the research is the uneven distribution of digital dividends across regions. Cities in the east, such as Beijing, Shanghai, Hangzhou, Suzhou, and Shenzhen, emerge as dominant hubs of digital activity and green innovation. These urban powerhouses enjoy what the study calls a “siphon effect,” drawing in capital, technology, and human resources from other regions, especially the central and western provinces. Social network analysis shows that these eastern cities sit at the core of China's green development network, with high in-degree centrality reflecting their role as major beneficiaries of spatial collaboration. In contrast, many cities in provinces like Gansu, Guizhou, and Inner Mongolia act as peripheral players in the network, contributing more to others than they receive. The study underscores how geographic, institutional, and infrastructural disparities perpetuate this imbalance.

A 340-Kilometer Radius of Green Influence

To better understand the extent of these digital spillovers, the study constructs five spatial weight matrices, measuring how a city’s digital economy influences its neighbors. The results reveal that spatial spillover effects are most potent within a 340-kilometer radius, a finding that has practical implications for urban and regional planning. Within this range, the digital economy not only strengthens a city’s own green development efforts but also benefits surrounding cities by enabling data sharing, collaborative governance, and regional innovation ecosystems. Beyond 340 kilometers, the influence sharply declines. This spatial boundary aligns with China's infrastructure layout and provincial administrative divisions, where collaboration is most feasible due to shared policies and economic ties. Policymakers are urged to build coordinated development strategies within this effective distance to maximize the benefits of digital transformation.

From Coastal Hubs to National Reach

In a further methodological innovation, the study uses the MGWR model to capture the spatial heterogeneity of digital impacts. In 2011, the positive effects of the digital economy on green development were mostly concentrated in the southern coastal regions, especially in Guangdong Province. By 2020, however, the digital economy’s influence had expanded significantly, becoming uniform across the country. This transition is largely attributed to the success of national policies such as the “Internet Plus” initiative, the “Strategic Outline for Digital Economy Development,” and infrastructure pushes like the expansion of 5G and cloud computing. These programs enabled cross-regional data platforms and helped central and western cities catch up. The study finds that the previously visible spatial disparities in digital economy benefits had largely flattened by the end of the decade, suggesting a maturing and more inclusive digital landscape.

Policy Lessons for a Greener Digital Future

The authors conclude with strong policy recommendations. First, eastern cities should take on the responsibility of diffusing digital technologies and best practices through strategic collaborations. Building digital industry clusters, investing in R&D, and nurturing talent are essential for sustaining momentum. Second, central and western regions, rich in land and renewable energy, should focus on hosting mega data centers and digital infrastructure as part of initiatives like “East Data, West Computing.” This approach could ease pressure on eastern cities while promoting balanced development. Third, to further amplify spillover benefits, cities should avoid duplicative investments and instead focus on optimizing industrial structures to minimize environmental risks. Finally, future research should explore additional variables such as fiscal decentralization and institutional coordination, which may further explain regional differences in digital impacts.

Overall, the comprehensive study makes it clear that the digital economy is not only an engine for innovation and economic growth, it is also a vital tool for achieving green development across China. The findings provide a robust empirical foundation for policymakers seeking to align digital transformation with sustainability goals, while also warning that success depends on narrowing regional gaps and fostering cross-boundary collaboration.