Over the past decade, the rapidly digitizing economy in China has attracted much attention in both academic and policy circles. Most existing studies focus on the positive impact digitalization has had on China's inclusive growth. Few of them have attempted to measure the widening digital divide and its potential impact. Using the 2017 and 2019 China Household Finance Survey (CHFS) data, this paper: (i) provides the first evidence that the digital divide has a significant negative impact on household consumption. For every unit increase in the digital divide, the level of household consumption will drop by about 28 percent; (ii) finds the negative impact stems from an integrated channel of rising unemployment, intensified liquidity constraints, and declining financial literacy; and (iii) further discloses that the digital divide has differential impacts on household consumption by category, while hinders consumption diversification. The results are robust to correcting for potential endogeneity due to sample selection, household heterogeneity, and reverse causality. Our findings shed new light on some little-documented evidence and have profound implications for related socio-economic policies that fully utilize technology to drive efficiency and inclusivity in the digital economy.