This chapter provides the understanding of local clustering in China and discusses the factors governing the process of local clustering in China. It intends to find the implications of the insights on clusters for those latecomers in the global economy who have made efforts to modernise their local traditional society by importing and adapting technology through extending global linkages with the industrialised centres of the world. The chapter aims to develop a typology that differentiates China’s clusters in terms of their potential for dynamic change. Industrial clustering is by a well known – if inadequately understood – term for conceptualising the spatial agglomeration process of enterprises and related supplier and service industries. According to the definition of an industrial cluster, the former industrial complexes planned under the central planning system in China can hardly be referred to as real clusters.