State‐NGOs relationship in the context of China contracting out social services

China's practice of contracting out social services raises two related questions. The first one seeks to determine “the contractual relationship” between the Chinese government and its third sector in a mixed welfare regime. The second one inquires whether China's commissioning welfare strategy has increased the power of its civil society. This study attempts to address these two issues based on the experiences of non‐governmental organisations (NGOs) in a Chinese city. It was found that the contracted NGOs were unable to obtain an equal status but were treated as assistants of local governments. The NGOs were also asked to do extra work that was not listed in the service contracts. Moreover, the service performance assessment criteria were unable to accurately evaluate the work of NGOs. Thus, the welfare participation of Chinese NGOs has not brought with them more political power. It is proposed that China's welfare reform needs to be backed up by its legal reform to put in place a mechanism that tackles the unequal power distribution between welfare purchasers and welfare providers. The study further illustrates that the Chinese government has adopted a pragmatic instrumentalism strategy by placing NGOs in a supplementary and subordinate role. This paper offers a conceptual discourse on analysing the state‐NGOs relationship against China's market reform and its search for a better welfare management strategy.