<p>The reuse of China’s industrial heritage has progressed rapidly under strong national policy support, yet many projects continue to face operational difficulties and fail to meet expected outcomes, creating a paradox in which policies become increasingly robust while project performance remains weak. To address this issue, and situated within China’s specific institutional context and governance structure, this study employs policy text analysis to systematically examine structural deficiencies in the industrial heritage reuse policy system and the institutional mechanisms that contribute to implementation difficulties. The findings reveal that the absence of dedicated national legislation has generated a vacuum in top-level institutional design; at the provincial level, implementation is constrained by barriers to cross-sectoral resource integration that undermine allocation efficiency; and at the municipal level, limited policy instruments and weak innovation incentives further restrict adaptive governance capacity. Furthermore, divergent objectives among governmental, market, and social actors generate structural tensions across cultural preservation, economic development, social welfare, and ecological restoration, while policy gaps in evaluation, planning, implementation, and oversight throughout the lifecycle of reuse projects further exacerbate inefficiencies. Based on these insights, the paper argues for enhancing the systemic effectiveness of industrial heritage reuse through optimized policy design, diversified policy instruments, and strengthened collaborative governance mechanisms, thereby outlining an institutional pathway toward the sustainable integration of cultural, economic, and social objectives.</p>