Abstract: The development of digital-intensive industries is an important way for China to build a modern industrial system. The paper constructs a multi-sectoral general equilibrium model to explain the mechanism of productivity improvement and capital deepening to promote the transformation of industrial structure from non-digital-intensive to digital-intensive, and carries out quantitative evaluation. The results show that: First, productivity improvement is an important driving force for China’s industrial structure transformation. From 2000 to 2014, the slowdown in total factor productivity of China’s digital-intensive industries led to a decrease of 1.61 and 1.63 percentage points in its employment share and output value share, and an increase in the total factor productivity of non-digital-intensive industries led to an increase of 0.24 percentage points both in its employment share and output value share. Second, due to the higher capital output elasticity and capital intensity of digital-intensive industries, capital deepening can significantly promote the development of digital-intensive industries. From 2000 to 2014, the increase in China’s investment rate led to an increase of 1.64 and 1.68 percentage points in the share of employment and output value in digital-intensive industries. Third, reducing labor market friction will help promote industrial structural transformation. From 2000 to 2014, the decline in labor market friction led to an increase of 10.59 and 0.71 percentage points in the share of employment and output value in digital-intensive industries. In this regard, to vigorously develop digital-intensive industries in the future, it is necessary to improve total factor productivity, strengthen investment momentum, optimize investment structure, and break down factor market barriers.

Key words: digital-intensive industries, industrial structure transformation, total factor productivity, capital deepening, market friction