Research On The Impact Of Digital Finance On The Upgrading Of Industrial Structure Under The Internal Cycle Of The Economy

Due to the Sino-US trade conflicts,the COVID-19 infection and the impact of the Russian-Ukrainian war,the international political and economic situation has undergone great changes,and China’s foreign trade and economic relationship is facing major uncertainties.For these reasons,as early as 2020 General Secretary Xi Jinping stressed that China should build a "new development pattern with domestic circulation as the main body and domestic and international dual circulation promoting each other",and this concept was officially proposed in the 14 th Five-Year Plan in 2021.In the new stage of development of building a modern socialist country in an all-round way,industrial structure upgrading is undoubtedly the key to achieving sustainable and healthy economic development.The upgrading of industrial structure requires comprehensive transformation and iterative development of various industries,and the digital finance can play an important role in this process.The combination of finance and technology enables digital finance to provide better financial support for enterprises that are difficult to be covered by traditional finance,and provide a new development path for industrial structure upgrading.Against this background,this paper uses panel data of 31 provinces and municipalities from 2011 to 2020 to study the impact of digital finance on industrial structure upgrading under the background of economic internal circulation and development.This paper first sorts out the relevant literature on economic internal circulation,digital financial development,and industrial structure upgrading.On this basis,the connotation of economic internal circulation and development,the characteristics of digital finance,the measurement of industrial structure upgrading and related influencing factors are further clarified.After that,a theoretical explanation of how digital finance promotes industrial structure upgrading is given,and the mechanism of digital finance to promote industrial structure upgrading under economic internal circulation is demonstrated,and then relevant hypotheses are put forward.In order to verify the rationality of these hypotheses,this paper uses principal component analysis to construct a comprehensive economic internal circulation index from the three dimensions of consumption,investment and innovation,uses the entropy method to construct the industrial structure upgrading index as the explanatory variable,and takes the Peking University Digital Inclusive Financial Index as the explanatory variable.The innovation index,consumption index and investment index were used as intermediary variables respectively to construct the mediation effect model so as to explore whether technological innovation,consumption and investment would play an intermediary transmission role in the process of digital finance affecting industrial structure upgrading.The formerly constructed economic internal circulation index is used as the threshold variable to construct the threshold model to explore whether the impact of digital finance on industrial structure upgrading will increase with the development of economic internal circulation.In order to make the study more perfect,this paper also adds government fiscal expenditure,urbanization level,proportion of foreign investment,and residents’ education level as control variables.The research results are as follows: Firstly,the appropriate development of digital finance at this stage can promote the upgrading of industrial structure.Secondly,technological innovation,the improvement of consumption and investment levels all play a mediating effect,and digital finance can better promote industrial structure upgrading by promoting technological innovation and improving consumption and investment levels.Finally,the development of economic internal circulation will produce a threshold effect,which is specifically reflected in the fact that after the economic internal circulation index reaches the threshold value,digital finance has a stronger impact on promoting industrial structure upgrading.With the continuous development of China’s domestic circular economy,the role of digital finance in promoting the upgrading of industrial structure will be further enhanced.Consequently,this paper suggests that at this stage,China can appropriately improve the development level of digital finance,but at the same time,it is necessary to strengthen supervision to prevent the excessive development of digital finance from resulting in the industrial development turning from real to virtual.At the same time,the government can promote the upgrading of industrial structure by encouraging scientific and technological innovation,expanding investment,and promoting household consumption.