Impact of Development of the Digital Economy on Consumer Habits: Evidence from China

Chinas digital economy is booming. It is changing consumers behavior and retailing. This paper studies how digitalization affects consumption in four scenarios: reducing information and search costs, algorithmic influence and social influence in consumers decision-making, payment innovations, and integrating online and offline consumption scenarios. Using official statistics, international reports, and peer-reviewed studies, this paper finds that mobile payments and e-CNY pilots have turned frictionless payments the norm; personalized recommendations and live-streaming commerce have speeded impulse buying and shortened the purchase journey; and omnichannel retail and O2O services have blurred the line between digital and offline shopping and fostered a always-on consumption habit. While digitalization brings convenience and inclusiveness, it also triggers concerns such as privacy concerns, algorithmic addiction, and consumer welfare risks. Governance such as the Personal Information Protection Law and new standards on algorithmic transparency are vital for digitalization to be consumer centric. At the end of the paper, we summarize policy and research directions for digital economy governance to balance growth and accountability.