China has actively implemented an industrial policy during the last two decades. However, despite important progress, the overall result is rather disappointing. Should China continue to pursue industrial policy? Or should it focus instead on developing successful globally competitive firms that are able to progress upwards through the value chain? This paper is based on an in-depth case study on the Shenhua Group, which has been deliberately built as an indigenous globally competitive coal corporation. The authors argue that it is still possible for China to build powerful big businesses in some sectors. However, a well-designed industrial policy is necessary.