Abstract: Digital economy has become a new driving force for the steady and long-term development of China's manufacturing. This paper adds digital economy to the global value chain (GVC) analysis framework, depicts GVC upgrade features from the dimension of breadth and height, explain the theory mechanism that digital economy affects the upgrading of GVC, establishes econometric models to empirically test the overall impact of digital economy on the GVC upgrading of China's manufacturing, the impact of industry heterogeneity and the threshold effect of technology and capital. The research findings are as follows :(1) Digital economy fundamentally changes the spatial layout and value distribution of all links of GVC, and influences the breadth and height of GVC of a country and its specific sectors by giving play to network connection effect, cost saving effect and value creation effect;(2) During the sample investigation period, the digital economy on the whole promotes the breadth and height of GVC in China's manufacturing. Labor-intensive industries show the same influence characteristics as the total sample, but the GVC upgrade effect of capital and technology-intensive industries in digital economy is not obvious. By further test, We find that the digital economy has a "U-shaped" single threshold effect on the GVC upgrade of capital and technology-intensive industries, which is firstly inhibited and then promoted. Therefore, mastering the key technologies of digital economy, strengthening the construction of digital infrastructure and guiding the digital transformation of enterprises are still urgent needs. This study is conducive to a deep understanding of the economic effects of digital economy, and to provide reference for the formulation of countermeasures for the GVC upgrade of manufacturing.