Carbon-digital interplay in industry risk spillovers: Analyzing spatiotemporal dynamics and network topology for adaptive governance

Advancing low-carbon and digital transformation represents two major global challenges of the era. Carbon regulation and digital transformation jointly pressure and empower industries, yet prior studies mostly examine their effects separately and neglect how their interaction reshapes multi-regional and multi-sectoral risk spillovers, being an issue of both theoretical and practical importance that remains underexplored. To address this gap, this study employs China, an economy undergoing this dual transformation, as the empirical context. This study utilizes panel data covering 30 Chinese provinces and 17 industries from 2006 to 2022, applies time-varying parameter vector autoregressive model to delineate dynamic risk spillover pathways, and incorporates regression models to systematically examine the impact mechanisms of carbon emissions, digitalization, and their interaction on industry risk spillovers. The main findings are: (1) industry characteristics: China's industry risk spillovers generally declined temporally and characterized by “higher in the north and lower in the south” spatially, with manufacturing being the primary source of risk spillovers; (2) carbon-digital nexus: carbon emissions and digitalization significantly aggravate risk spillovers separately but with substitution interaction effects; (3) adaptive governance: proposing tailored suggestions to the cyclical differences in carbon-digital adaptation across regions and sectors. Theoretically, the paper extends the Substitution Theory of Resource Constraints into industry risk spillovers, revealing the substitution effects in carbon-digital interactions. Practically, it proposes a multi-tiered synergistic governance framework and offers differentiated, actionable policy and enterprise strategies for managing risks during concurrent carbon and digital transitions. It also contributes as a referential theoretical framework and practical paradigm for global emerging economies pursuing low-carbon digital governance.