The Digital Economy and Carbon Emissions in China: A Moderated EKC Analysis Incorporating Green Finance, Local Fiscal Pressure, and Climate Policy Uncertainty

The digital economy, while a pivotal engine for growth, presents a dual challenge in the context of climate goals. Utilizing panel data from 267 Chinese cities covering the period from 2011 to 2022, this study investigates the nonlinear relationship between the digital economy and carbon dioxide emissions, testing its conformity with the Environmental Kuznets Curve (EKC) hypothesis. Moving beyond a static verification, this research introduces a dynamic framework by examining how three exogenous shock variables—green finance, local government fiscal pressure, and climate policy uncertainty—reshape the EKC curve. Specifically, construct an extended EKC model with interaction terms to empirically assess how these exogenous shock variables shift the inflection point horizontally and vertically and alter the curve's slope. Our findings reveal that these factors significantly influence both the timing and peak level of emissions, as well as the efficiency of decarbonization before and after the turning point. This study provides a nuanced understanding of the digital economy's environmental impact, offering policymakers critical insights to navigate the green transition in the digital era.