Fostering Domestic Demand Through Digital–Real Economy Integration: Evidence from Household Consumption in China

This paper examines the relationship between digital–real economy integration (DREI) and household consumption using panel data from 30 Chinese provinces over the period 2014–2024. By developing an entropy-weighted modified coupling coordination model, the level of DREI is quantitatively measured, and the mechanisms of its impact and its heterogeneity at the household consumption level are explored. The empirical results show that strengthening DREI has a significant positive impact on household consumption, particularly in China’s central region and in the goods sector. Additionally, this paper identifies three primary channels through which DREI can promote household consumption: optimizing the business environment to minimize transaction costs, developing logistics to improve the efficiency of resource allocation, and promoting financial inclusion to boost household consumption potential. The findings in this paper have significant policy implications for leveraging DREI to transform China’s economic growth pattern towards high-quality domestic demand in the era of artificial intelligence and sustainable development.