The rapid advancement of digital technologies is reshaping urban landscapes and economies globally. China, in particular, has prioritized digital transformation, evidenced by the integration of the "digital economy" into government work reports since 2017 and significant growth in sectors like software and cloud computing. The commercial circulation industry, encompassing wholesale, retail, accommodation, and catering, plays a crucial role in urban economic development. Digitalization offers this industry unprecedented opportunities to enhance efficiency and reach consumers more effectively. While existing research explores digitalization's impact on specific aspects of commerce, a comprehensive analysis of its influence on the total factor productivity (TFP) of the commercial circulation industry through the lens of "digital city competitiveness" is lacking. This study aims to address this gap by examining 15 emerging first-tier cities in China, focusing on how overall digital city competitiveness and its sub-dimensions impact the TFP of the commercial circulation industry within these cities. The selection of emerging first-tier cities is strategic, as these cities represent significant population growth, large consumer markets, and strong economic vitality, becoming key drivers of China's future economy, supported by government policies promoting their development. This study offers a novel approach by constructing a Digital City Competitiveness Index using the entropy method and analyzing both the overall effect and the influence of specific sub-dimensions on TFP, providing valuable insights for policymakers.

Existing literature extensively covers the digital transformation of the commercial circulation industry and its various impacts. Research on the digital economy ranges from macro-level evaluations of digital economy indicators to micro-level analyses of enterprise digital transformation. Macro-level studies focus on constructing comprehensive index systems encompassing dimensions such as the internet, digital finance, digital industrialization, and industrial digitization, employing various methods to measure the added value and output of the digital economy. Intermediate-level studies investigate the impact of digitalization on industry or city-level green total factor productivity. Micro-level studies utilize methods such as text analysis and expert scoring to assess enterprise digital transformation. Research on the impact of the digital economy on the commercial circulation industry often examines specific effects on aspects like customer experience, supply chain management, or overall industry growth, analyzing the role of digital retail, intelligent logistics, and supply chain integration. Studies on the development of the commercial circulation industry itself focus on evaluating its developmental level and its determinants, using various indicator systems and examining factors such as digital technology, industrial structure upgrades, government subsidies, and social capital. However, a key research gap is the lack of comprehensive academic evaluations of digital city competitiveness and its impact on the total factor productivity of the commercial circulation industry. This research bridges this gap by comprehensively analyzing the impact of digital city competitiveness.

This study employed a quantitative approach using data from 15 emerging first-tier cities in China from 2017 to 2021. A Digital City Competitiveness Index (DCI) was constructed using the entropy method. This index incorporates six dimensions: urban information infrastructure construction, urban governance capacity, urban service capability, urban industrial development, urban innovation capacity, and urban ecological environment. Each dimension comprises several specific indicators (detailed in Table 4 of the paper). Data for the DCI was sourced from the China City Statistical Yearbook, China Information Statistical Yearbook, China Science and Technology Statistical Yearbook, and other relevant sources. The dependent variable, total factor productivity (TFP) of the commercial circulation industry, was measured using the Malmquist index based on input-output analysis (equations 2 and 3 in the paper). Inputs included labor (number of employees) and capital (estimated using the perpetual inventory method), and the output was the value-added of the urban commercial circulation industry. Data for the TFP calculation were collected from the China City Statistical Yearbook and China Population Statistical Yearbook. The study also included control variables: regional economic development (per capita GDP), technological innovation level (number of patents), openness to foreign trade (foreign direct investment), and digital financial development level (Digital Financial Inclusion Index). These data were sourced from the China City Statistical Yearbook, Wind Database, and the China Intellectual Property Office. A two-way fixed-effects model (Equation 1) was employed to analyze the relationship between DCI and TFP, controlling for the aforementioned variables. The model accounts for both regional and temporal fixed effects. Statistical analysis was performed using Stata 17 software. To further examine the study's hypothesis, the research also conducted additional regressions using each of the six sub-dimensions of the DCI as separate independent variables while controlling for other factors. This allowed for a more detailed examination of the impact of each individual sub-dimension on TFP.

The study's key findings confirm a significant positive relationship between digital city competitiveness and the total factor productivity of the commercial circulation industry in the 15 emerging first-tier cities in China. Specifically: 1. **Overall Digital City Competitiveness:** The regression analysis revealed a statistically significant positive effect of the overall DCI on TFP, even after controlling for other factors. The coefficient for DCI consistently remained significantly positive across various model specifications, suggesting that a higher level of digital city competitiveness leads to greater TFP in the commercial circulation industry. Hangzhou consistently ranked highest in the DCI across the study period. 2. **Sub-Dimensional Analysis:** Further analysis examining the effects of each of the six DCI sub-dimensions individually provided granular insights: * **Urban Information Infrastructure Construction:** This dimension had the most significant positive impact on TFP, highlighting the crucial role of robust digital infrastructure in enhancing efficiency and productivity within the commercial circulation industry. * **Urban Governance Capacity, Urban Service Capability, Urban Industrial Development, and Urban Innovation Capacity:** All these dimensions showed significant positive effects on TFP, though to a lesser extent than the information infrastructure. * **Urban Ecosystem:** This dimension had a significantly negative effect on TFP. This unexpected result suggests a potential trade-off between ecological considerations and economic growth in the short term, though long-term benefits are acknowledged. The study suggests that this negative effect could result from strict environmental regulations restricting certain commercial activities, resource diversion, or the need for significant investment in greener technologies within the commercial circulation industry. 3. **Control Variables:** Control variables, including regional economic development, technological innovation, openness to foreign trade, and digital inclusive finance development, all showed positive impacts on TFP, with technological innovation having the strongest positive effect.

The findings of this study provide strong evidence supporting the hypothesis that digital city competitiveness significantly enhances the total factor productivity of the commercial circulation industry. The strong positive impact of urban information infrastructure underscores the critical role of investing in advanced digital infrastructure for boosting economic productivity. This investment facilitates the efficient flow of information, enabling quicker transactions and real-time decision-making, significantly benefiting the commercial circulation industry. The positive effects of industrial development, innovation, services, and governance capacity highlight the importance of a holistic approach to digital city development, integrating various elements to maximize productivity gains. The negative impact of the urban ecosystem dimension, however, warrants careful consideration and policy adjustments to strike a balance between ecological protection and economic development. The significant effect of technological innovation highlights the importance of prioritizing and supporting technology-driven innovation for improving economic productivity and competitiveness. The results are consistent with existing literature and theoretical models suggesting technological progress drives economic productivity. This study's findings are especially relevant to policymakers in China, who are actively involved in promoting the development of digital cities and fostering high-quality growth in the commercial circulation industry. This study emphasizes that investment in advanced digital infrastructure and supporting elements such as innovation, industrial development, and efficient governance should be considered crucial aspects of strategies aimed at promoting economic growth.

This study contributes to the literature by empirically demonstrating the significant positive relationship between digital city competitiveness and the total factor productivity of the commercial circulation industry in China's emerging first-tier cities. The findings highlight the crucial role of urban information infrastructure and suggest a holistic approach to digital city development that balances economic growth with ecological concerns. Policy implications include prioritizing investments in digital infrastructure, fostering innovation and industrial clusters, improving urban services and governance, and striking a balance between economic development and environmental sustainability. Future research could expand the geographical scope to include smaller cities and rural areas, conduct longitudinal studies to track long-term impacts, and investigate the effects of digital city development on other sectors of the economy.

The study's limitations include its focus on China's emerging first-tier cities, limiting the generalizability of findings to other regions or types of cities. The relatively short time frame of the data (2017-2021) might limit the ability to capture long-term trends. The specific methodologies used to construct the Digital City Competitiveness Index and measure TFP could introduce potential biases or inaccuracies. The study also acknowledges that external factors like national policies, international events, and market fluctuations were not fully accounted for and might have affected the results.