Abstract: The article examines the relationship between digital economy development and local government size in China from 2010 to 2020 and finds that:(1) the relationship between digital economy development and local government size in China shows a first suppressed and then inflated (1) there is a "U"-shaped correlation between the development of China's digital economy and the size of local governments, and government governance capacity plays a significant mediating and negative regulating role in the process of digital economy influencing the change of local government size, and the improvement of government governance capacity can significantly inhibit the expansion of local government size in synergy with digitalization; (2) there are three obvious thresholds for China's digital economy influencing the change of local government size (2) There are three obvious thresholds for the change in the size of local governments affected by the digital economy in China; (3) From a sub-regional perspective, the development of the digital economy in the eastern region has entered the rising range of expanding the size of government, while the central and western regions are still in the falling range of the digital economy effectively reducing the size of local governments; (4) The change in the size of local governments between provinces in China has obvious "path-dependent" characteristics, and in order to continue to promote efficient and streamlined service-oriented (4) The change in the size of local governments at the inter-provincial level in China is characterized by obvious "path dependence".

Key words: digital economy, local government size, government governance capacity, panel data