How does digital trade promote carbon emissions reduction? A dual perspective on supply and demand

Abstract

Abstract Digital trade assumes a vital role in tackling critical challenges such as the mitigation of carbon emissions and the pursuit of sustainable development. This study draws upon panel data encompassing 30 provinces and municipalities in China spanning the years 2013 to 2021. By establishing an index system to gauge regional digital trade development levels, the article examines the impact mechanism and spillover effects of digital trade on carbon reduction from both the supply and demand perspectives. The research results show that: (1) Digital trade can effectively promote regional carbon reduction, with a more pronounced effect in China's central and western regions and lower carbon emissions regions. (2) Digital trade further suppresses regional carbon emissions through green technological innovation and upgrades in residential consumption structure. (3) Digital trade has spillover effect on carbon emissions, and this “neighborhood effect” is greater than the “local effect”. Digital trade provides strong support for carbon reduction and sustainable development and also provides a strategic direction for government policy formulation.