”Data” tells the new city: digital technology enhances efficiency of new-type urbanization

Introduction Digital technologies are reshaping the economy and, by restructuring factor flows and resource allocation, are significantly affecting urban development. Focusing on firms' digital technology behavior, this paper examines how digital technology improves the efficiency of new-type urbanization under the dual mechanisms of government and market, and what effects follow, with the aim of broadening the theoretical account of the relationship between digitization and urban development. Methods Using city-firm matched panel data that link Chinese prefecture-level cities and A-share listed companies for 2005–2022, we construct a large-sample database with a long time span and wide coverage that closely reflects city-firm linkages and apply a fixed-effects model with both city and firm effects for identification to strengthen the reliability and robustness of the estimates. Results The empirical findings are as follows. (1) Firms' use of digital technologies significantly improves the efficiency of new-type urbanization. (2) On the government side, digital technologies enhance the government's digital focus while reducing the distortion caused by fiscal interventions, thereby improving the governance environment. On the market side, they encourage the agglomeration of producer services and enhance the allocation of human capital, forming a market transmission chain that promotes gains in urbanization efficiency. (3) The positive effect of digital technologies is stronger in the eastern and central regions, in cities with lower levels of environmental recycling, in higher-income cities, and in cities with more advanced industrial structures. Discussion Drawing on a micro-level perspective of firm behavior, this paper uncovers the mechanisms through which digital technologies drive new-type urbanization and offers empirical evidence to inform policies that coordinate urban digital transformation with new-type urbanization.