Impact of the digital economy in transition to carbon neutrality in Chinese province

The effect of digitization on achieving carbon neutrality goals is a crucial concern for high carbon-emitting nations globally. This study offers a comprehensive analysis of the link between the digital economy and carbon neutralization capacity in Chinese provinces from 2010 to 2021, utilizing the GMM technique. Drawing on data from the Provincial Economic Yearbooks of 23 provinces, the research uncovers notable correlations, highlighting the vital role of ICT infrastructure investment in boosting regional carbon neutralization efforts. Both private and government-led investments have positive impacts, with private investments contributing to a 0.42% increase and government investments resulting in a 0.27% increase in carbon neutralization capacity. Interestingly, a 0.09% rise in carbon neutralization capacity occurs for every 1% increase in ATM (Automated Teller Machine) payments, demonstrating the transformative potential of digital financial systems. In contrast, factors like population size and economic growth show a negative correlation with carbon neutralization capacity. To promote carbon neutralization through the digital economy, provincial-level policies should focus on encouraging private sector investment in ICT infrastructure, fostering public-private partnerships, enhancing digital literacy, and integrating digital technologies into environmental management strategies.