This paper provides a theoretical framework to help explain political embeddedness of China's high-tech regions, how it forms and operates. It also illustrates how the relationships and approaches of political embeddedness influence and constrain the strategic choices of focal firms or among firms. The semiconductor industry in Yangtze Delta is discussed as a case. Our empirical findings show the context of political embeddedness differs depending on time variance, which didn't fully support the Guthrie's (1998) claim that the art of guanxi (i.e. guanxi practice) may occupy a diminishing role in China's urban industrial economy as the economic transition progresses. It also diverges from Chen's (2001) findings that the level of political embeddedness was relatively high as Taiwan Semiconductor Manufacturing Company Limited (TSMC) was even dominated by Taiwanese government in the beginning, but as the firm progresses and becomes more adept in its function, the level of political embeddedness declines gradually. We argue political embeddedness should be a dynamic process, but the significance of political embeddedness does not necessarily decline depending on time variance.