Amid intensifying global economic rivalries, China has pinpointed the digital economy and sustainable growth as key accelerators for societal and economic progress. Digital innovation (DI) plays a crucial role in propelling China’s economy towards sustainable growth, by serving as the technological backbone of the digital economy. This study explores how DI influences China’s GTFP through an analysis of panel data covering 30 provinces, municipalities, and autonomous regions from 2005 to 2021. The results indicate that DI greatly contributes to the enhancement of GTFP. DI can also indirectly promote GTFP by increasing the effectiveness of factor allocation efficiency including capital, labor, and technology. Heterogeneity analysis results indicate that the influence of DI on GTFP differs depending on the degree of intellectual property protection (IPP), the development of digital infrastructure construction (DIC), and the geographical location. A higher degree of IPP and developed DIC make areas better suited for the role of DI in advancing GTFP. Furthermore, in the central and eastern areas, the impact of the digital economy on the promotion of GTFP is particularly noticeable. This study offers reliable empirical evidence for the effect of DI on GTFP and contributes to China’s digital economy and sustainable development.

From June to August 2015, China’s security market suffered a severe decline due to the impact of the stock market crash. For this reason, the Shanghai Stock Exchange issued a notice on December 4, 2015, deciding to implement the circuit breaker mechanism on January 1, 2016. However, the mechanism was abolished only four days after its implementation. Therefore, this paper provides an empirical effectiveness analysis of this circuit breaker mechanism based on the nine CSI 300 industries using the regression discontinuity design method. The empirical results show that the implementation of the circuit breaker mechanism has led to the breakpoints of volatilities in nine industries and has significantly increased its market fluctuation. Moreover, we also find that the implementation of the circuit breaker mechanism has different impacts on the different industries, such as the effectiveness of the public, and consumer industries are at the medium level and show more stable fluctuations. Therefore, we suggest that the further circuit breaker mechanism in China’s financial markets can be piloted from the public and consumer industries rather than directly implementing it on the whole CSI 300.