Leveraging the advantages of the digital economy to achieve the goal of common prosperity has become an important requirement for China's current digital economic governance and optimization of the common prosperity strategy. Starting from the perspective of “digital empowerment and smart city construction”, this article analyzes the important role and existing problems of China's digital economy in social life, and puts forward corresponding countermeasures and suggestions: through the empowerment of digital economy in urban construction, we can leverage the matching effect, multiplier effect, and trickle down effect of digital economy to accelerate urban digital construction. Tailored to local conditions, overall layout of smart city infrastructure, collaborative cultivation of digital industry chain, joint construction of digital governance system, acceleration of enhancing people's digital literacy, and thus promoting urban development. The digital economy is a key path for China to move towards high-quality development. China should continue to promote an innovation driven development strategy, strive to develop new technology applications, build an ecological chain for the digital industry, and ensure that the digital economy provides strong support for the construction of smart cities. This article has certain reference significance for the economic development strategies of the Chinese government and other countries.