To avoid the middle-income trap, China’s leaders call for innovation to accelerate development in China. However, since it is not clear how innovation and (regional) development reinforce each other, there is no blueprint strategy for successful innovation capacity building throughout China. Due to resource scarcity in its “Western” regions, it is thus far from certain that innovation capacity building will support regional development. Departing from sociology of knowledge, narrations are constitutive of policy practice. This article analyses narrative patterns of policy experts to understand how innovation capacity building and regional development are negotiated in China’s lagging “West.” The comparison of Yunnan and Chongqing cases demonstrates that innovation capacity building is primarily infused with theoretical expectations: resource scarcity does not allow for grounding innovation as a strategy of regional development in the local context. This leads to narrations of “local” alternatives to innovation capacity building in centralist China.