Greener Cities Through E-Commerce? Evidence From China’s Demonstration City Policy

A study by Chinese universities reveals that government-driven e-commerce development significantly improves urban air quality by promoting industrial upgrades and reducing energy use. However, its effectiveness varies across regions and pollution levels, requiring tailored policy support.

In a compelling intersection of technology and environmental stewardship, researchers from Jilin University of Finance and Economics, Jilin University, and Shanghai Lixin University of Accounting and Finance have uncovered an unexpected environmental benefit of digital transformation. Their study explores how China’s aggressive promotion of e-commerce is not only fueling economic growth but also contributing to cleaner urban air. Using extensive panel data from 279 Chinese cities between 2005 and 2021, the researchers treat the rollout of the National E-commerce Demonstration Cities (NEDC) policy as a quasi-natural experiment, employing a multi-period difference-in-differences (DID) model to identify its causal effects on air quality.

E-Commerce: A Digital Tool with Environmental Power

The study’s core finding is both surprising and significant: cities designated as NEDCs experienced a measurable drop in PM2.5 levels, a dangerous form of air pollution linked to millions of premature deaths globally. Rather than being an accidental by-product of modernization, this air quality improvement is directly tied to the structural shifts enabled by e-commerce. As cities adopt digital trade, they tend to phase out energy-intensive, pollution-heavy industries and move towards service-driven economies. This transition improves the efficiency of production and distribution while reducing emissions.

Digital platforms also enable more precise demand forecasting and production planning, reducing overproduction and resource waste—two major contributors to air pollution. Moreover, e-commerce streamlines supply chains, cutting out intermediaries and slashing unnecessary logistics. In place of countless individual shopping trips, goods are transported more efficiently through optimized delivery networks, helping reduce vehicle emissions.

From Clicks to Clean Skies: How It Works

The researchers outline three main mechanisms through which e-commerce facilitates cleaner air. First, it upgrades industrial structures. By fostering technology-intensive services and supporting the decline of high-pollution industries, e-commerce promotes economic sectors that naturally emit less pollution. Second, it reduces energy consumption intensity by digitizing operations and improving energy efficiency across industries. And third, it changes consumption behavior. As consumers turn to online shopping, they make fewer trips to stores, reducing personal vehicle use and the associated exhaust emissions. Simultaneously, intelligent logistics systems reduce the number of delivery trips, aggregate demand, and cut fuel consumption.

Interestingly, while the increase in delivery traffic might seem to counteract these benefits, the study finds that centralized logistics generally produce fewer emissions than decentralized individual shopping trips. Furthermore, with the rise of electric delivery vehicles and smart warehousing, the carbon footprint of the last mile is becoming increasingly manageable.

Where It Works Best and Where It Doesn’t

The environmental impact of e-commerce isn’t evenly spread. The study reveals that the green benefits are most visible in China’s eastern and western regions. In the east—China’s most economically advanced area—e-commerce policies accelerate green technology adoption and supply chain modernization. In the less developed West, digital trade helps shift economies away from heavy industry toward more sustainable services. The central region, however, lags behind. Burdened with traditional manufacturing and lacking policy support and technological infrastructure, central cities see less of e-commerce’s environmental upside.

The analysis also considers city-level differences in market maturity, logistics infrastructure, and consumer purchasing power. In low-marketization and low-logistics cities, the environmental benefits of e-commerce are stronger, suggesting that digital transformation has the most impact where offline markets are inefficient. Conversely, in highly developed cities with advanced logistics networks, the gains are marginal, as efficiencies have already been realized. Similarly, in areas with lower consumer spending power, e-commerce consolidates demand and reduces emissions more effectively than in wealthier areas where fragmented, high-frequency shopping persists.

When E-Commerce Hits Its Limits

A particularly thought-provoking aspect of the study is its analysis of e-commerce’s effectiveness across varying levels of pollution. Using quantile regression, the researchers find that while digital trade significantly improves air quality in lightly and moderately polluted cities, its effectiveness diminishes in heavily polluted areas. At higher pollution levels, the overwhelming emissions from entrenched industrial activity render the modest gains from e-commerce negligible. In such cases, e-commerce must be part of a broader environmental strategy involving regulatory crackdowns on polluters, clean energy investments, and industry-wide reforms.

This nonlinear relationship underscores the fact that while e-commerce can contribute to pollution reduction, it is not a cure-all. Instead, it functions best as a complementary strategy, particularly effective in regions that are transitioning or moderately polluted, but not a substitute for more aggressive environmental policy in the most affected areas.

Toward a Greener Digital Future

To maximize the environmental benefits of digital trade, the authors call for targeted policies that align e-commerce development with green goals. Governments should offer subsidies and tax incentives to e-commerce firms that adopt eco-friendly practices, invest in green logistics, and promote low-carbon consumption. Mandatory carbon footprint disclosures, digital infrastructure investments, and integration of e-commerce into carbon trading and green finance frameworks are also recommended.

The study also advocates for differentiated strategies across regions. In underdeveloped areas, expanding e-commerce access and improving basic infrastructure can yield immediate environmental dividends. In advanced regions, the focus should shift to greening logistics and tightening environmental standards. A collaborative, cross-sectoral effort involving industry, government, and consumers is crucial to harnessing the full potential of e-commerce for sustainable development.

In redefining e-commerce not just as an economic engine but also as an environmental instrument, this study challenges conventional thinking and opens the door for digital trade to play a starring role in the global fight against pollution. With the right policies, what began as a platform for convenience may evolve into one of the key levers of the low-carbon economy.