Impact of Digital Economy on Dual Circulation: An Empirical Analysis in China

Abstract

With the growth of Internet technologies, including 5G, blockchain, and big data, the digital economy has emerged as an important driving force of economic growth, offering a fresh viewpoint on the sustainability of dual circulation. Thus, this study analyzes the impact of the digital economy on dual circulation and the underlying influencing mechanism. The influence of the digital economy on the degree of dual circulation sustainability was measured using panel data of 30 provinces in China from 2011 to 2020, and the influence was found to be significant and statistically positive. The analysis of the mechanism indicates that the increasing technological innovation capacity can amplify the digital economy’s effect on dual circulation. The promotion effect of the digital economy has a spatial spillover effect. The function of the digital economy in fostering dual circulation is heterogenous, with a greater impact on central and eastern China. Therefore, this study proposes that increasing communication infrastructure investment and implementing differentiated policies supporting the digital economy should be considered by policymakers to boost dual circulation.