This article uses theories of industrial policy to analyse the growth of China's telecommunications equipment industry over the past 20 years. It highlights the role of the Chinese government in shaping the sector, by first utilizing imported equipment, then promoting Sino-foreign joint ventures and finally fostering domestic companies. Significantly, the government encouraged market competition, and avoided the pitfall of monopoly state control. Today, key telecommunications players include joint ventures, state-owned companies and even a major Chinese private corporation. The article concludes that the government's fiscal and regulatory industrial polices were successful, in that they rapidly built a modern communications network while promoting a vibrant free-market competitive environment.