This paper aims to refine and expand the theoretical and application framework of higher-dimensional digital chaotic system (HDDCS). Topological mixing for HDDCS is strictly proved theoretically at first. Topological mixing implies Devaney's definition of chaos in a compact space, but not vice versa. Therefore, the proof of topological mixing promotes the theoretical research of HDDCS. Then, a general design method for constructing HDDCS via loop-state contraction algorithm is given. The construction of the iterative function uncontrolled by random sequences (hereafter called iterative function) is the starting point of this research. On this basis, this paper put forward a general design method to solve the construction problem of HDDCS, and several examples illustrate the effectiveness and feasibility of this method. The adjacency matrix corresponding to the designed HDDCS is used to construct the chaotic Echo State Network (ESN) for predicting Mackey-Glass time series. Compared with other ESNs, the chaotic ESN has better prediction performance and is able to accurately predict a much longer period of time.