The Impact of Digital Economy on Sustainable Economic Growth: A Comparative Study between China and the European Union

Abstract

Abstract The accelerated development of the digital economy, fueled by the widespread adoption of digital technologies such as artificial intelligence (AI), has emerged as a trans formative force reshaping the global economic landscape, industrial systems, and socio – political structures. Currently, the digital economy accounts for over 20% of the global GDP, and it is projected to experience substantial growth in the next decade. However, its impact on sustainable economic growth is uneven across different regions, primarily due to variations in institutional quality and other factors. This thesis focuses on the two most dynamic and complex economies globally—China and the European Union (EU)—and conducts an in – depth comparative analysis of the impact of their digital economies on sustainable economic growth. The two regions differ in terms of their stages of economic development and governance systems, and they also have vastly different digital policy approaches. China adopts a government – led, top – down digitalization strategy, while the EU follows a market – driven, regulation – centric model. Understanding the similarities and differences in the digital economic transformation paths of these two countries is of great significance for policymakers, researchers, and business leaders aiming to achieve inclusive and sustainable growth. The research is grounded in three key theoretical frameworks: the Endogenous Growth Theory (Romer, 1990), the National Innovation Systems Theory (Freeman, 1987; Lundvall, 1992), and the Sustainable Development Theory (Brundtland Report, 1987). These frameworks provide a comprehensive perspective on how digital transformation affects economic development and sustainability.