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This paper evaluates the level of the digital economy in Chinese cities based on digital industrialization and industrial digitalization. The research focuses on the effects of spatial mechanism of the urban digital economy on the quality of firms’ exported products.

The authors use the principal component analysis method to evaluate the level of China’s urban digital economy, and spatial metrology to measure the spatial effects of the digital economy on product quality.

The findings suggest that the urban digital economy can expand the quality of firms’ exports. The digital economy has spatial dependence, spatial spillover and spatial heterogeneity on product quality. At the same time, the spatial effect has a significant nonlinear effect and threshold effect. Further decomposition shows that industrial digitalization is the core factor of enterprises’ export products quality, and the micro-mechanism of this impact is mainly manifested in optimization of resource allocation.

The innovation of this paper is reflected explicitly in exploring the quality upgrading of export products from the background of the digital economy, providing a reference for the improvement of China’s export trade competitiveness and the cultivation of a trade power. The authors studied two different mechanisms (specialization division of labor and optimization of resource allocation) to explain the spatial imbalance of export product quality to provide empirical support for enterprises and government departments to formulate quality upgrading policies accurately.