Given the persistent overcapacity and the growing demand for high-quality economic development, how to successfully address overcapacity by empowering an “efficient market” through a “proactive government” has become a major challenge in both theory and practice. Existing research has largely examined the formation mechanisms of overcapacity from the perspectives of market distortions or institutional failures. However, there remains a lack of systematic analysis of how the government optimizes the market operating environment through digital governance measures, thereby influencing enterprise capacity utilization rates.Based on a theoretical framework of “proactive government” empowering “efficient market”, this study uses data from Chinese A-share listed companies from 2012 to 2023. Treating the 2016 “Internet Plus Government Services” initiative as a quasi-natural experiment, it employs a difference-in-differences (DID) model to empirically examine the impact of government digital governance policies on enterprise capacity utilization rates. Mechanism analysis and heterogeneity analysis are further conducted to provide quantitative assessments from multiple perspectives. The findings reveal four main results. First, government digital governance significantly enhances enterprise capacity utilization rates, and this conclusion remains robust after various robustness tests. Second, government digital governance improves production capacity by curbing excessive investment and excessive hiring, expands consumer demand by promoting consumption scale growth and structural upgrading, and strengthens the alignment between production capacity and consumer demand by improving the information environment and reducing product backlogs, thereby further increasing capacity utilization. Third, the policy’s enhancing effect on capacity utilization is more pronounced for enterprises with the following characteristics: located in megacities and large cities; operating in highly marketized and non-competitive industries; and belonging to manufacturing, capital-intensive, or non-high-tech sectors. Fourth, further analysis reveals that government digital governance not only enhances enterprise capacity utilization but also improves total factor productivity, thereby promoting high-quality development of enterprises.Compared with previous research, the marginal contributions of this work are primarily reflected in three aspects. First, from a research perspective, this study fills the gap in previous research on causal relationships by integrating government digital governance into an analytical framework of “proactive government” and “efficient market”, focusing on enterprise capacity utilization. Second, in terms of mechanism analysis, based on market-enhancing theory, this study systematically identifies the pathways of government digital governance from three dimensions, namely production capacity, consumer demand, and the alignment between production capacity and consumer demand, thereby enriching the theoretical explanation. Third, in terms of heterogeneity analysis, this study identifies policy effect differences across regional, industry, and firm-level characteristics, providing empirical evidence for improving the precision and effectiveness of government digital governance.To some extent, this study reveals the underlying logic and causal relationship between government digital governance and enterprise capacity utilization, enriching research on the relationship between “proactive government” and “efficient market.” It not only offers new governance insights for government departments to address overcapacity through digital technologies but also provides important theoretical foundations and policy implications for promoting high-quality economic development.