Abstract: The digital economy is an important grip to further promote high-quality development of China’s economy. Based on the typical characteristics of the digital economy, this paper explains its inner mechanism influencing the high-quality development based on a systematic analysis framework of dynamic transformation, efficiency transformation and quality transformation. The study finds that the digital economy as a whole promotes high-quality economic development, and the results remain stable after a series of tests such as introducing instrumental variables, replacing estimation methods, and replacing dependent variables. Mechanism analysis shows that the digital economy can promote high-quality development through technological deepening, efficiency changes in configuration optimization, and quality changes in market integration. Further analysis reveals that for regions with high maturity of digital economy development and large scale of real economy, the incentive effect of digital economy on high-quality economic development is more significant. The research results have enriched the theoretical and empirical research on the development of the digital economy, provided policy inspiration for continuously strengthening, optimizing, and expanding China’s digital economy, and offered policy enlightenment for promoting high-quality economic development.

Key words: digital economy, technology deepening, allocation optimization, market integration, high-quality economic development