Can digital financial inclusion promote counties’ industrial structure upgrading?

Industrial structure upgrading (ISU) is the core driver of China’s high-quality economic development and rural revitalization, yet county-level economies face severe structural imbalances, with digital financial inclusion (DFI) emerging as a critical support for industrial restructuring. Based on panel data of 1,772 counties in China, threshold regression models are adopted to empirically investigate the nonlinear impact of DFI on ISU. The results show that DFI has a significant double threshold effect on ISU, with its promotional effect rising from 2.08% to 3.40% and then falling to 2.82% across successive threshold stages; a 1% increase in DFI can drive a typical county with a GDP of RMB 30 billion to achieve an annual increase of RMB 13.92 million to 22.74 million in tertiary industry output via resource reallocation from manufacturing to high-value-added services. Among the three core sub-dimensions of DFI, digitization level is the foundational driver of its overall effect on ISU, and DFI optimizes county-level industrial structure through two channels of boosting manufacturing output and facilitating regional innovation. This study enriches county-level DFI-ISU literature and provides actionable policy insights for governments to leverage DFI for industrial upgrading through strengthened rural financial digitization, optimized resource allocation, and targeted policies.