China has announced ambitious goals to be a global leader in Artificial Intelligence (AI) and Big Data technologies. Yet, when looking at the implementation side, a “digital implementation gap” becomes self-evident, as Beijing’s comprehensive plans and digital ambitions are often only implemented selectively at the local level. This chapter identifies barriers to a more comprehensive implementation of digital policies at the local level in China and suggests an analytical framework to analyze these institutional barriers. Key barriers at the local level include shortcomings in the current digital planning system, insufficient political and economic incentives provided to local implementers, limits to public and private participation, and financial, technical, and political capacity constraints of local implementing agencies. Findings conclude that China’s top-down, state-led digitalization approach is effective in pushing the digital transformation forward, but its coercive elements come at a high social cost.