Invisible Digital Barriers: Digital Trade Barriers and Export Product Quality Upgrading

Data localization mandates, cross-border data flow curbs, and digital service licensing rules have spawned new trade frictions distinct from traditional tariffs and non-tariff barriers. This article investigates how such digital trade barriers affect the export product quality of Chinese listed firms. Using the OECD Digital Services Trade Restrictiveness Index and a shift‑share approach, we construct an exogenous firm-level exposure index by matching national regulatory intensity with preset provincial-industry input structures and firm cost profiles. Two-way fixed-effect regressions, validated by instrumental variable tests and multiple robustness checks, reveal that higher digital trade barrier exposure significantly reduces firms’ export technological sophistication. Two underlying mechanisms are verified: suppressed value-added intensity and distorted internal resource allocation. The adverse impact is more pronounced for non-state-owned and non-overseas-cross-listed firms, which lack institutional and informational buffers. Dynamic analysis further shows the negative effect peaks in the policy enforcement year and dissipates within 3 years, allowing room for prompt policy intervention. Overall, this study highlights digital trade regulations as an overlooked key factor of export competitiveness and proposes coordinating international digital trade rule-making and boosting domestic digital infrastructure as countermeasures.