Generative AI and Digital Governance Transformation: Evidence from China’s Prefecture-level Cities on Adaptive Institutional Dynamics

Generative Artificial Intelligence plays a pivotal role in transforming digital governance systems amid global challenges of high accessibility but low public satisfaction. To systematically investigate its impact mechanisms, this study develops an integrated analytical framework combining governance theory with empirical econometrics, leveraging large-scale prefecture-level data across China. Our approach employs variable substitution tests and mediation analyses to disentangle complex causal pathways, revealing that GAI significantly elevates administrative efficiency through smart service innovation while exhibiting regionally divergent effects moderated by institutional adaptability. Crucially, the research demonstrates that strategic policy-infrastructure coordination can amplify technological benefits and mitigate data sovereignty risks. These findings provide actionable insights for designing adaptive governance paradigms that balance operational efficiency, algorithmic accountability, and equitable service delivery in the intelligent governance era.