Government policies and actions in transitional economies have far-reaching consequences for technology progress. Many studies suggest the important role of governments in providing policies and finance to facilitate technology innovations. The Chinese government has often been seen to exemplify this. This article probes government actions in practice, the way it is conducted and the negative consequences for innovation. We focus on one of China’s most important and successful sectors – construction. An analytical framework based on ‘complex systems industry’ is used and a causal map developed to examine the role of the Chinese government acting as client, regulator and administrator of industrial and professional bodies and their impact on innovation in the construction sector. This paper confirms that innovation is industry specific and social and economic context dependent.While recognising the powerful role of the Chinese government, it argues that in reality the ‘Chinese government’ is not a uniform entity, but rather consists of various entities acting in accordance with their varied vested interests at a specific time and under particular circumstances.