Government-Led Digital Governance and the Digital Divide Among Cities: Implications for Sustainable Digital Transformation in China

Drawing on panel data from 279 prefecture-level cities in China from 2011 to 2022, this study employs the National Pilot Policy of Information Benefiting the People (NPIB) as a quasi-natural experiment to examine how government-led digital governance shapes the digital divide among cities. Using a difference-in-differences (DID) design combined with mediation and spatial analyses, the results demonstrate that the NPIB policy significantly narrowed inter-city digital disparities, with findings robust across alternative model specifications and placebo tests. Mechanism analysis shows that digital governance promotes inclusion primarily through three pathways: strengthening strategic policy orientation, enhancing technological innovation capacity, and stimulating digital market vitality. Heterogeneity analysis indicates that policy effects vary by regional development, urbanization level, and fiscal autonomy, being most pronounced in eastern cities and those with moderate urbanization and fiscal self-sufficiency. Spatial analysis reveals that while digital governance improves local inclusion, it can generate negative spillovers among neighboring cities with similar economic structures, partially offsetting aggregate gains. Overall, the findings highlight the importance of regionally differentiated strategies, cross-regional coordination, and sustained investment in digital infrastructure to promote balanced, inclusive, and sustainable digital transformation—providing practical insights for developing countries aiming to bridge structural divides and advance digital sustainability.