This paper examines the Chinese government’s contribution to Yiwu’s status as the world’s node for the low-grade commodity trade. Based on interviews and a consideration of rich archival data, it explores the extent to which government policies promote or restrain Yiwu’s evolution in its marketization, industrialization, urbanization, internationalization and digitalization. This paper contributes to business practice regarding trade and cluster development, and to theory of institutional entrepreneurship by extending its focus from business entrepreneurs to political entrepreneurs.