This paper considers the influence of a centralized state on the emergence of a creative industry, as illustrated by the issues faced by the Chinese clothing industry as it strives to become a creative fashion industry. Under the economic reforms of the 1980s, the clothing industry was strategic in creating wealth and employment. Within two decades, China became world leader in the production and export of textiles and clothing. Early in the twenty-first century, the development of a creative economy became a new objective for the government, following a global awareness that originated in the United Kingdom in the late 1990s. Innovation, scientific research, and the promotion of cultural heritage have been key assets for developed countries to acquire competitive leading roles, which is now also the goal of China, as mentioned in the 2006 Five-Year Plan. Shanghai, as the center of trade and internationalization for China, has recently joined UNESCO's network of creative cities, and has implemented policies toward creativity. However, this paper highlights that under a strong state intervention, a unique historical and cultural context, and a fast-moving, but mass-oriented market, the feasibility of developing a creative fashion industry raises more challenges than in liberal economies.