This article explores the relationship between institutional environments and individual artists’ artistic creativity to provide an understanding of the ‘creative city’, using urban sculpture planning in Shanghai as a case study. I argue that political censorship alone will not stifle artist’s creativity: when authoritarian power interacts with elite social networks and permits a certain form of market economy, artistic creativity becomes concentrated on the technical aspects of artistic representation and can be channeled towards utilitarian projects in service of the community and the creative economy. A less open or tolerant institutional setting results in a type of ‘structured creativity’—this refers to novel ideas and artistic expressions that emerge in the process of seeking valuable alternative outlets when facing political constraints. ‘Structured creativity’ characterizes the ‘creative city’ in countries such as China. The implication is that such ‘structured creativity’ contributes to the economy in terms of traditional statistical indicators, but is problematic in other ways. Richard Florida’s ‘creative city’ thesis simplified the relationship between social conditions, creativity and economy; similarly, the complexity of this relationship has been overlooked in the critical literature about this topic.