Does the digital economy contribute to carbon emissions reduction? A city-level spatial analysis in China

The rapid development of the digital economy provides an unprecedented opportunity for China to achieve carbon neutrality by 2060. While previous studies have explored the relationship between the digital economy, digital technologies, and energy, the impact of the digital economy on carbon emissions has not received sufficient attention in the literature. Meanwhile, although cities are the basic units for carbon emission reduction policies, few studies have explored carbon emissions at the city level in China. This study investigates the spatial correlation and spillover effects of the digital economy development on carbon emission reduction in 248 prefecture-level cities in China from 2011 to 2019. The proposed approach relies on Moran’s I test and the spatial Durbin model (SDM). First, the study’s results show that carbon emissions are more severe in industry-intensive cities in northeast and central China than in the eastern coast during the sample period. Second, the development of the digital economy is conducive to reducing carbon emissions. Third, Moran’s I and SDM tests find that the digital economy has a significant spatial effect on carbon emissions, with a close spatial connection between cities. Based on the above findings, this study offers relevant policy recommendations and suggestions for realizing China's carbon neutrality goal.