Digital Financial Inclusion and Import Quality Upgrading: Evidence From Chinese Intermediate Products

This study empirically investigates how intermediate import quality responds to the development of digital financial inclusion (DFI) using China's DFI Index obtained from Peking University and Chinese Customs data for 2011–2019. The results reveal that DFI has significantly promoted the import quality upgrading of Chinese manufacturing intermediate products. Further mechanism tests find that the quality improvements are mainly explained by the financial constraints' reduction effects. Meanwhile, DFI will boost import quality through both intensive and extensive margins. The heterogeneity analyses show that DFI mainly improves the import quality of intermediate products sourced from countries with higher economic developments and better institutional qualities. Besides, cities that are geographically closer to other relatively higher‐DFI cities are more responsive to the development of DFI. Moreover, compared to those capital‐intensive imports, products in Chinese labor‐intensive industries have experienced greater quality upgrading, especially for those by general trade mode. These findings are of great significance for actively supporting the development of DFI, and thus better releasing its policy dividends to the quality upgrading of intermediate imports.