When China joined the WTO in 2001, conventional wisdom held that global trade rules would act as a credible commitment to domestic reform and restrain Chinese industrial policymaking. While significant reforms did take place in the early 2000s, scholars soon pointed to a “reform reversal” and the growing assertiveness of a Chinese “state capitalism”. Why did the expansion of market-oriented institutions in response to WTO entry not constrain the subsequent rise of activist industrial policies? What explains the timing of this reform reversal? Drawing on automated text analysis of an original dataset of Chinese industrial policies as well as in-depth interviews, this paper disaggregates the Chinese central state into its major agencies and unpacks the divergent policy strategies adopted by competing agencies in the WTO era. I show that the timing and trajectories of this divergence turns on the durability of global trade commitments and the political relationship between China’s party and its state. Rather than a uniform convergence to liberalization, WTO rules have intensified the competition within the central state over the direction of economic policy. The result is an enhanced dualism in the governance of the Chinese economy, with intensified market competition promoted by one set of central economic agencies, yet a more consolidated industrial policy promoted by rival agencies.