This article investigates the role of Chinese local governments in the China-Myanmar Economic Corridor (CMEC) under the Belt and Road Initiative (BRI). It focuses on the practices of local governments in Yunnan, a province strategically significant for its proximity to Myanmar and its historical role in China's border trade and governance. The research explores how provincial, prefectural, and city-level authorities in Yunnan actively shape transnational economic clusters through industrial policies and socio-economic governance. Drawing on official documents, reports, and interviews with policymakers, entrepreneurs, and industrial park staff, the study highlights the dynamic interplay between local and central government initiatives in the BRI-driven CMEC projects. By adopting a constructivist perspective, the article critiques state capitalism theories that overemphasize central government dominance and crony relations with big conglomerates. Instead, it argues for recognizing the multi-layered and pluralistic nature of the Chinese state, where local governments mobilize policies to align national development goals with local interests. Through two case studies, the analysis demonstrates how local governments integrate policies of Special Economic Zones (SEZs) into the CMEC framework to balance industrial development with socio-economic objectives. The findings underscore the contingent and localized nature of policy implementation, offering a nuanced understanding of governance in transnational development contexts. This research contributes to the literature on state capitalism, transnational economic cooperation, and the role of local actors in shaping BRI projects.