Income inequality is a bottleneck constraining China's sustainable development. The development of the digital economy generates new opportunities to narrow this gap and change the urban-rural dichotomy. Using provincial panel data in China from 2011 to 2020, this study examines the effect of digital economic development on urban–rural income inequality and investigates the moderating and threshold roles of new urbanization. High-dimensional fixed-effects estimates indicate that the digital economy significantly reduces urban-rural income inequality. However, both interaction and threshold regressions reveal pronounced stage dependence: as the level of new-type urbanization rises, the marginal inequality-reducing effect of the digital economy weakens, and the convergence effect is stronger in regions with lower urbanization levels. Regional heterogeneity analysis further shows that this gap-narrowing impact is pervasive nationwide but substantially larger in less developed western regions, suggesting a "latecomer advantage" in capturing digital dividends. Mechanism analysis based on income composition indicates that the digital economy promotes convergence primarily by raising rural wage income and improving the transfer-income structure, while its effects on operating and property income display divergent patterns. Overall, the findings highlight the conditional and structural nature of digital dividends and imply that policies should coordinate digital development with new-type urbanization to enhance rural digital infrastructure, digital skills, and equal access to public services.

• Local and circular initiatives are often small and fragmented. • Little is known about how to effectively scale local circular supply chains. • We present 17 factors for scaling across 8 established amplification processes. • We contribute factors to increase the size and transformative impact of initiatives. The fashion and textiles industry operates a global supply chain that causes harm to the environment, emitting pollution and generating waste across all stages of production, consumption and disposal. The implementation of a local circular economy would reduce impact, shorten import and export distances while retaining the value of materials through practices like reuse and recycling. However, current local and circular initiatives operate in a system that is incomplete to provide sufficient support structures for their operations, meaning they are often small, fragmented, and at risk of cessation. To address this, five focus groups with fashion industry stakeholders were conducted where factors for scaling at a local and national level were discussed. Data analysis revealed 17 factors for scaling, two of which were unique to scaling nationally. These offer ways for local circular clothing supply chains to stabilise, speed up, grow, replicate, transfer, spread, scale up and scale deep. The results provide a new insight on how to increase the scale and transformative impact of local circular initiatives emerging in towns and cities across the UK. The research is useful for the industry and policymakers in informing the development of purposive interventions that seek to step beyond current niche and fragmented solutions and build circular systems that can overtake the current linear, energy intensive, pollutive and waste generating system. Significantly, this will facilitate a shift away from global production and distribution, to grow more locally and systemically robust initiatives at the local and national scale.