["Pacific Economic Review, EarlyView. ", "\nABSTRACT\nHigh‐quality development through the digital economy has become a consensus in Chinese society currently, which brings challenges for government–business interaction within the context of new‐generation information technology (NGIT). This paper examines the impact and mechanism of NGIT industrial policy on the cost of equity capital from the perspective of government–business collaboration. The main test shows that the ‘Broadband China’ policy has significantly reduced the cost of equity capital. The mechanism tests reveal how the ‘Broadband China’ policy functions in optimizing the return, the configuration, and the distribution of factors, and demonstrate the effect of government–business collaboration. Furthermore, regional economic development, industrial competitiveness, and supply chain issues prove to strengthen the above mechanisms, respectively. The heterogeneity analyses show that the effect of the ‘Broadband China’ policy on the cost of equity capital is realized through equity investment, is positively affected by the government–business relationship, and has a spatial aggregation effect. Actually, the digital transformation of the economy, led by NGIT, now provides the government and companies with opportunities for coordinated development. Therefore, for the government, we recommend that it improve the support systems related to NGIT industry. For the companies, we also expect them to achieve sustainable development in digital economy.\n"]