Does More Rural E-Commerce Still Mean Common Prosperity? A Digital Saturation Trap in Sustainable Urban–Rural Development in China

Rural e-commerce is treated as a lever for common prosperity, but its welfare effect turns non-monotonic across digital-development gradients, raising concerns about the widening urban–rural gap in sustainable regional development. We built a county-year panel of 2725 Chinese counties from 2014 to 2022, with Taobao village density as the treatment, land-based agricultural value conversion efficiency as the county-level mediator, and the Peking University digital financial inclusion digitization sub-index as the moderator. The estimations combine two-way fixed-effect regressions, continuous-interaction moderation, Hansen panel-threshold regression, Callaway–Sant’Anna difference-in-differences, Bartik shift-share instrumentation with Rotemberg-weight diagnostics, and multiple imputation by chained equations supplemented by propensity-score sensitivity checks. Taobao village density linearly depresses rural per-capita disposable income and produces a significant U-shape in the nightlight Gini with an in-sample turning point. The marginal effect on Sen welfare moves from approximately +0.99 log-units at low digitization to approximately −0.95 at high digitization, with the sign-reversal becoming statistically significant only above the 55th percentile of the moderator (Hansen threshold at the 85th percentile), so the trap is a tail regime rather than a generalized reversal; over the panel window, however, 80.5% of counties cross into the trap zone in at least one year. Approximately 28 percent of the welfare squeeze passes through the land-based ecological efficiency channel, with parallel mediators delivering 19–90 percent. The deepest squeeze appears in cash-crop counties that platform theory predicted to benefit most, where the welfare effect at high digitization is roughly 3.1 times the staple-grain effect. We label this pattern the Digital Saturation Trap and argue that sustainable urban–rural policy should shift from uniform platform access toward differentiated platform governance in counties beyond the saturation threshold.