The wide-ranging implications of globalised production networks (GPNs)for national varieties of capitalism are only now beginning to be broached by political economists and human geographers. As production processes increasingly striate national political territories, an area in need of further research is the impact of GPNs on developing economies’ state architectures — which have historically utilised state-owned or state-directed industries in pursuit of national development projects. The advent of GPNs radically altered the possibilities for such strategies by apparently undermining the ability of developing states to develop national champions — large, vertically integrated firms either nationally owned if not subject to great levels of state control. Does the preponderance of transnational production networks, SMEs, foreign direct investment, and export processing zones entail an end to the significance of national states and politics for development trajectories? Experience suggests otherwise, and a literature is beginning to theorise various forms by which statehood, sovereignty and politics continue to shape GPN-organised manufacturing. The reciprocal interactivity of networks and institutions remains in need of further research, however. This article probes these questions with reference to a detailed case study of the developmental experience of Dongguan city in China between 1978 and 2008. In this period, Dongguan (a major export manufacturing hub on the southern coast)came to the forefront of China's national strategy of export-led industrialisation — but simultaneously crystallised the rise of fragmented production. The city's industrialisation was governed by this contradictory dynamic – on the one hand, GPN-integration transformed its social and political order, while subsequent interventions by the provincial and national states aimed to envelop the city in the institutional framework of China's political economy.