From Platform Economy to Digital Transformation: How China's Marketplaces Accelerated Economic Growth

This paper investigates whether China’s e-commerce boom actually changed household behavior and the broader economy, not just retail activity. Using panel data from all 31 mainland provinces between 2012 and 2022 (341 province-year observations), the authors find that a 10% increase in provincial e-commerce transaction volume is associated with a 1.84% increase in per-capita consumption expenditure and a 2.11% increase in total retail sales, both significant at the 1% level. When they correct for reverse causality using a two-stage least squares approach (instrumenting with lagged telecom infrastructure investment), the estimated effects are even larger, suggesting the baseline OLS results actually understate the true impact due to measurement error. What sets the study apart is its mechanism analysis: digital payment penetration accounts for about 41% of the pathway linking marketplace growth to consumption, while logistics network density accounts for about 23% of the pathway linking marketplace growth to retail sales. In other words, it’s not just that e-commerce exists, it’s the payment and delivery infrastructure underneath it that drives the real economic effect. The findings are robust across multiple alternative model specifications and support the broader push toward consumption-led growth in China’s economic policy.