Unlocking Sustainable Futures: How Digital Economy Transition Drives Urban Low-Carbon Development in China

The digital economy (DE) has become an essential driver of sustainable growth under China’s “Dual Carbon” goals of carbon peaking and neutrality. However, limited evidence exists on the DE’s city-level effects on green and low-carbon transition. This study investigates the impact and mechanisms through which digital economy transition (DET) influences urban low-carbon development, utilizing panel data from 283 Chinese cities between 2011 and 2018. A comprehensive digital economy development (DED) index is constructed to measure regional digitalization levels. The findings reveal the following: (1) DET significantly improves CEE, and a one-standard-deviation increase in DED raises CEE by approximately 3.7%. (2) The effect of DET on CEE exhibits regional and resource-based heterogeneity, with western regions and resource-dependent cities benefiting more substantially. (3) The mechanisms through which DET improves CEE include stimulating the technological innovation level, attracting foreign direct investment (FDI), and promoting the financial development level. These insights provide valuable theoretical and practical implications for policymakers seeking to harness the digital economy to achieve sustainable urban development and carbon neutrality.