Introduction
In response to the growing demand for elder care, the Chinese government has introduced a range of policies to expand formal care options and support families in their caregiving responsibilities. Under the influence of a more market-oriented economy and the growing global trend of public-private partnerships (PPPs) in social service provision, these policies encourage collaborative efforts between state and non-state actorsFootnote 1 with the aim of improving service efficiency and quality since the 2000s in China (Wang, Reference Wang, Glinskaya and Feng2018). Over more than two decades, there have been notable policy shifts in the socialisation of elder care services in China, with two distinct directions emerging. These policy reforms have aimed to shift the policy focus from institutional care towards promoting home- and community-based services (HCBS) in the elder care system (Feng et al., Reference Feng2020). Additionally, there has been an increasing incorporation of non-state actors’ participation and market mechanisms in the elder care service sector (Luo and Zhan, Reference Luo and Zhan2018).
Despite the alignment of ageing in place with older people’s preferences and the expansion in service capacity and options through PPPs, studies indicate that the utilisation of HCBS remains low in China, highlighting inefficiencies within the formal elder care system (Zhou and Walker, Reference Zhou and Walker2021). This contradicts the expectation that PPPs should improve efficiency in welfare services and responsiveness to diverse social needs (Dunleavy and Hood, Reference Dunleavy and Hood1994). Against this background, this article explores how PPPs function in the HCBS sector in China using Guangzhou as an example. This study aims to shed light on the knowledge of PPPs in social service provision in China by examining the roles, responsibilities, and relationships between state and non-state actors. Additionally, we demonstrate why achieving the full potential of PPPs remains challenging in the Chinese context.
Policy background and the development of HCBS in Guangzhou
The Chinese government’s efforts in socialising elder care services began in the 1980s as part of the broader welfare socialisation (fuli shehuihua) reform, which paralleled China’s transition from a centrally planned to a market-oriented economy. Welfare socialisation redistributes welfare responsibilities by transforming the state’s role from that of a direct provider to a regulator, while encouraging non-state funding and provision (Lei and Walker, Reference Lei and Walker2013). In essence, welfare socialisation reflects China’s strategy of mobilising non-state actors to deliver social services through market mechanisms under continued state coordination (Lei and Walker, Reference Lei and Walker2013; Luo and Zhan, Reference Luo and Zhan2018). While it shares features with welfare marketisation in Western contexts, such as the separation of purchaser and provider roles, competition and customer choice, and the diversification of service providers, its underlying governance logic differs. It embodies a hybrid neoliberal–socialist rationality that combines market-oriented efficiency with socialist principles of equality and political control (Howell et al., Reference Howell, Martinez and Qu2021). Thus, compared to welfare marketisation that reduces the state’s role, China’s welfare socialisation is characterised by strong state-led planning and oversight.
The gradual development of HCBS has unfolded within this broader welfare socialisation reform. Early efforts to develop China’s elder care system primarily focused on institutional care. It was not until the early 2000s that the central government formally introduced HCBS to China’s elder care system (Wang, Reference Wang, Glinskaya and Feng2018). The Ministry of Civil Affairs launched the ‘Starlight Program’ in 2001 to expand the coverage of HCBS, and the Guangzhou municipal government followed this policy and established the ‘Starlight Family for the Aged’ with a community-based coverage. The programme was primarily funded through welfare and fiscal allocations, while local sub-district offices and residents’ committees were responsible for management and daily operations. However, these service centres faced challenges in meeting the needs of older people, especially those with long-term care needs, due to insufficient funding and a lack of professional staff (Xie, Reference Xie2008).
From the mid-2000s, the Chinese government began encouraging NGOsFootnote 2 to participate in social service provision (Wang, Reference Wang, Glinskaya and Feng2018). ‘Community or Family Comprehensive Service Centres’ was a pilot project introduced by the Guangzhou municipal government in 2009 to contract various community services (including HCBS) to registered NGOs, which are usually organisations with social work qualifications (Lin, Reference Lin2017). This initiative introduces competition and accountability mechanisms in the delivery of community services, while local governments retain responsibilities for regulation, funding, and oversight (Chan and Lei, Reference Chan and Lei2017). However, studies revealed that competition between service providers was not consistently practised because of the lack of capacity in the NGO sector and the government’s deliberate control (Huang and Yang, Reference Huang and Yang2016). Engaging non-state actors focused on increasing welfare service quantity and securing the needs of the most disadvantaged population, while professional elder care services, such as healthcare and long-term care, remained underdeveloped because most organisations engaged in PPPs are social work agencies that lack the necessary capacity (Lin, Reference Lin2017).
The Thirteenth Five-Year National Plan of Undertakings on Ageing and Development of an Aged Care System (2016–2020) signals a policy shift to further marketise the elder care service sector (State Council, 2017). One of the key measures is to fully liberalise market access to the elder care service sector by abolishing pre-establishment licensing and actively encouraging private and foreign capital investment (State Council, 2016). In response to the central government’s call for emphasising HCBS’s role in the elder care system and service marketisation, in 2016, Guangzhou established comprehensive online platforms to integrate community organisations and resources to provide more professional services and engage more diverse organisations besides social work agencies in HCBS provision (Guangzhou Municipal Government Office, 2017). The municipal government introduced a series of policy supports to incentivise non-state sector participation in the development of HCBS, including support for establishment, operations, workforce development, etc. (Guangzhou Civil Affairs Bureau, 2019). In 2020, the Guangzhou municipal government launched a flagship programme, the Guangzhou Sub-district Comprehensive Elder Care Service Centre (Yikang Centre) Construction and Improvement Action Plan (hereafter The 2020 Plan), to facilitate the comprehensive provision of HCBS through establishing physical community service centres. This approach encourages private capital investment in HCBS and enables PPP elder care service centres to operate by providing both marketised services and public-funded services under government procurement (Guangzhou Daily, 2020).
Over the past decades, Guangzhou’s HCBS sector has undergone incremental changes towards welfare socialisation, with non-state actors playing an increasingly significant role in service delivery and expansion of market mechanisms. Especially with the recent policies’ emphasis on service diversification and marketisation, we can anticipate increased complexity in PPPs with the growing involvement of non-state actors (particularly private enterprises) with diverse natures and expertise. These shifts could disrupt the pre-established roles, responsibilities, and relationships between state and non-state actors in PPPs, creating complexities in coordination dynamics. Therefore, to harness the full potential of PPPs, it is crucial to renew our understanding regarding how state and non-state actors collaborate and the underlying logics of challenges that emerge in these partnerships.
Literature review
Public-private partnership and coordination challenges
PPPs can be broadly understood as cooperative institutional arrangements between public and private actors for the provision of public infrastructure and services (Hodge and Greve, Reference Hodge and Greve2007). The rise of the PPP stems from the quest for efficiency in the public sector and the need to respond to increasingly heterogeneous social needs (Hood, Reference Hood1991; Dunleavy and Hood, Reference Dunleavy and Hood1994). Despite their global diffusion, PPPs take different institutional forms and governance approaches across countries, depending on diverse political systems and institutional arrangements (Hodge et al., Reference Hodge, Greve and Biygautane2018; Rosell and Saz-Carranza, Reference Rosell and Saz-Carranza2020; Klijn et al., Reference Klijn, Koppenjan, Warsen and Meek2021). These differences also reflect distinct theoretical assumptions in the literature about how PPPs foster collaboration and generate synergistic value, rooted in two main theoretical perspectives, New Public Management (NPM) and New Public Governance (NPG).
Under the NPM paradigm, partnerships with non-state actors should be structured around formal contracts that specify roles, responsibilities, performance targets, risk division, and safeguard mechanisms (e.g., penalties and incentives) to ensure accountability and prevent opportunistic behaviour (Klijn et al., Reference Klijn, Koppenjan, Warsen and Meek2021). However, this perspective has been criticised for overlooking how contractual governance fails to address the evolving power asymmetries, conflicting institutional logics, and value tensions among partners (Klijin and Koppenjan, Reference Klijn and Koppenjan2000; Newman and Clarke, Reference Newman and Clarke2009; Osborne, Reference Osborne2010). International experiences with a wide array of approaches demonstrate that realising the synergistic benefits of PPPs is challenging (Lodge and Wegrich, Reference Lodge and Wegrich2014; Lægreid et al., Reference Lægreid2015). The involvement of cross-sectoral actors introduces institutional barriers that complicate decision-making and implementation as actors from various organisations and sectors make decisions under different rules and structural backgrounds (Klijn and Teisman, Reference Klijn and Teisman2003; Koppenjan and Klijn, Reference Koppenjan and Klijn2004; Ansell and Gash, Reference Ansell and Gash2008). Meanwhile, the multiplicity of actors and their interdependencies further add to the complexity in the partnership, with often conflicting principles and values that can result in strategic behaviours (Teisman, Reference Teisman2000; Klijn and Teisman, Reference Klijn and Teisman2003).
NPG emerged as a reevaluation of NPM that denotes the complexity of PPPs and the importance of relational governance (Klijin and Koppenjan, Reference Klijn and Koppenjan2000; Newman and Clarke, Reference Newman and Clarke2009; Osborne, Reference Osborne2010). NPG reflects the growing recognition that hierarchical steering is increasingly ineffective in complex governance environments characterised by fragmentation, specialisation, and interdependence among actors. From this perspective, PPPs operate more effectively when interdependent actors can collaborate through trust-based, horizontal networks to co-produce public services (Ansell and Gash, Reference Ansell and Gash2008). Such arrangements distribute knowledge, resources, and power more evenly among actors, enabling more responsive, negotiated, and innovative solutions (Klijn and Koppenjan, Reference Klijn and Koppenjan2000; Newman and Clarke, Reference Newman and Clarke2009; Osborne, Reference Osborne2010). In summary, PPPs are hybrid in their empirical characteristics as well as in the theoretical foundations that underpin this phenomenon, and a comprehensive understanding requires evaluating both the contractual and relational aspects of the partnership (Klijn, Koppenjan and Warsen, Reference Klijn, Koppenjan, Warsen and Meek2021).
With the proliferation of PPPs around the world, scholars have also revealed how PPPs are often introduced without sufficient adaptation of existing policy-making processes and institutional structures, which undermines their ability to achieve the expected synergetic benefits (Teisman and Klijn, Reference Teisman and Klijn2002). The power relationships between state and non-state actors and the political and social institutions in place can influence the definition and implementation of PPPs and eventually shape how PPPs are defined, implemented, and perform in practice (Hodge et al., Reference Hodge, Greve and Biygautane2018; Rosell and Saz-Carranza, Reference Rosell and Saz-Carranza2020; Klijn et al., Reference Klijn, Koppenjan, Warsen and Meek2021). Although China has experienced economic marketisation over the past decades, the one-party rule still determines the state’s leading role in society, particularly in policy-making, such as the welfare strategy that guides social welfare provision. This configuration offers a contrasting environment to the Western liberal democracies that dominate the PPP literature (Shi, Reference Shi2017; Kim, Reference Kim2022). As PPP scholarship increasingly draws on international evidence to explain how and why governments operating under different contextual settings develop diverse institutional frameworks and approaches for managing PPPs (Rosell and Saz-Carranza, Reference Rosell and Saz-Carranza2020), examining PPPs in China thus presents a valuable opportunity to advance our knowledge of PPPs within a non-democratic, state-led market regime.
Public-private partnership in social services in China
A growing body of literature has demonstrated that since the Chinese government reduced its role in welfare provision in the 1980s, PPPs have become China’s primary welfare strategy to expand social service capacity through introducing market mechanisms and engaging non-state actors in welfare provision (Chan and Lei, Reference Chan and Lei2017; Cortis et al., Reference Cortis, Fang and Dou2018). Researchers point to the emergence of a more pluralistic supply structure, including the rise of social work as a professional field and the proliferation of NGOs in social service provision (Martinez et al., Reference Martinez, Qu and Howell2021). Nonetheless, questions arise about whether this increase in service capacity translates into improved responsiveness to social needs and service quality.
While public procurement does not necessarily weaken the autonomy of social organisations, as long as they have other funding sources (Salamon, Reference Salamon1995), the reality in China is that NGOs face strict restrictions on raising money from society, making government funding their primary financial source (Huang and Yang, Reference Huang and Yang2016). Their reliance on government funding reduces their independence and autonomy and limits their roles in channelling social needs into service delivery (Lin, Reference Lin2016; Chan and Lei, Reference Chan and Lei2017). Research pointed out that NGOs are often required to undertake tasks beyond the original service contract, prioritising local governments’ requirements over the needs of service users (Wen, Reference Wen2017). Additionally, the government’s performance measurement focuses on quantitative indicators, which do not support service providers’ focus on quality (Lin, Reference Lin2016).
Meanwhile, the autonomy of the NGO sector is further limited by the blurred boundaries between state and non-state actors, as the sector includes both grassroots NGOs and government-organised NGOs (GONGOs). Although formally registered as NGOs, GONGOs are directly initiated, funded, or managed by government agencies, serving as critical intermediaries between the state and civil society. While their involvement enhances the overall capacity for social service provision, their dominance often skews resource allocation, restricting the growth and autonomy of grassroots NGOs (Shi, Reference Shi2017). Consequently, the NGO sector in China remains significantly less autonomous than its counterparts in democratic contexts. These institutional constraints raise concerns about the development, capacity, and social influences of China’s NGO sector, which is characterised by small-sized organisations, a lack of management capacity (Hasmath and Hsu, Reference Hasmath and Hsu2014), and insufficient specialist agencies (Fisher et al., Reference Fisher, Li and Fan2012).
The dependence on government funding and the lack of autonomy also lead to debates regarding how PPPs in social services have altered the relationship between state and non-state actors. Some scholars consider the rise of PPPs to be mutually beneficial for the government and service organisations, potentially leading to collaborative governance in China (Jing and Hu, Reference Jing and Hu2017). In addition to expanding the scale of non-state providers (Jing and Savas, Reference Jing and Savas2009) and developing service capacity (Cortis et al., Reference Cortis, Fang and Dou2018), some scholars also believe that PPPs have empowered NGOs through various mechanisms such as access to funding, enhanced reputation, branding (Jing, Reference Jing2018), and even greater policy influence (Shen and Yu, Reference Shen and Yu2017).
However, others hold that PPPs in social services have not brought about fundamental changes to the relationship between state and non-state actors, with service organisations primarily serving as instruments for the government to achieve welfare targets over which they have little influence (Zhao et al., Reference Zhao, Wu and Tao2016; Shi, Reference Shi2017; Howell, Reference Howell2019). Market competition has proven to be more symbolic than substantive (Jing, Reference Jing2012; Jing and Chen, Reference Jing and Chen2012), with local governments frequently favouring informal contracting practices with GONGOs (Zhao et al., Reference Zhao, Wu and Tao2016) or organisations with pre-established relationships (Jing, Reference Jing2012; Jing and Chen, Reference Jing and Chen2012). Furthermore, NGOs’ autonomy is curtailed by government-defined project objectives, performance metrics, and monitoring mechanisms, which are primarily shaped by political incentives rather than service quality or user needs (Cortis et al., Reference Cortis, Fang and Dou2018). These constraints leave NGOs with little room to advocate for service users or to influence the broader policy agenda in the domains where they operate.
Despite extensive scholarly discussions on providing social services through PPPs in China, existing research overlooks critical dynamics introduced by the increasing participation of for-profit organisations and the growing incorporation of market mechanisms. Unlike NGOs, private enterprises typically possess greater financial independence, which can potentially reshape the established roles and power dynamics between state and non-state actors. Additionally, while state actors could be more cautious about the potential political risks when engaging NGOs in welfare provision (Cortis et al., Reference Cortis, Fang and Dou2018), the involvement of private enterprises raises the question of whether their participation can better align with the neoliberal logic of the Chinese government’s welfare strategy and improve service capacity and responsiveness to social needs. This shift invites a critical re-examination of how responsibilities are allocated between state and non-state actors, what kinds of relationships emerge under current PPP arrangements, and how these dynamics influence the implementation and performance of PPPs in social service provision.
Research objectives and significance
This research investigates how state and non-state actors collaborate to provide HCBS for older people in China through PPPs. We analyse the partnership considering contractual and relational aspects and use key coordination challenges observed in Guangzhou to illustrate broader institutional and political dynamics that constrain the realisation of PPPs’ surplus value. While China’s welfare reform promotes involvement from both NGOs and private enterprises, existing scholarship has largely focused on NGOs as the primary non-state partners. However, recent policy shifts toward liberalising the elder care market have significantly increased private enterprises’ contribution to welfare service provision, potentially reshaping established power dynamics and adding new layers of complexity to PPP coordination. By examining this evolving landscape, the study provides a more comprehensive understanding of PPPs in China’s social services sector. Furthermore, as most PPP research focuses on Western liberal democracies, this study extends the literature by examining how PPPs are governed and function within authoritarian, state-led market regimes.
Methodology
We selected Guangzhou for analysis because of its pioneering role in PPP initiatives, elder care service development, and policy experiments, ensuring its advanced and mature policy environment for examining PPP implementation. We recruited participants using snowball sampling, targeting senior managers and directors from the non-state sector. As a specific group of key informants rather than a general population, probabilistic sampling was neither appropriate nor feasible for this study. Referrals from trusted contacts also facilitated rapport-building, which was important given the nuanced and potentially sensitive nature of discussions on PPP collaboration and challenges. Interviews began with two key informants from a private enterprise and an NGO, who then referred additional participants to ensure diversity among participants.
We interviewed nine participants, including three participants from private enterprises, five from NGOs (with one from the hub organisation overseeing HCBS projects on behalf of the municipal government), and one from a state-owned enterprise (SOE). Table 1 summarises participant information, with interviewee G8T’s personal information kept confidential to protect their anonymity. Recruitment concluded as later interviews echoed earlier responses, and no major contradictions emerged. This study received ethical approval from the Research Ethics Committee of The Hong Kong University of Science and Technology (Reference Number: HKUST/HREC #611). All participants were informed about the study’s objectives, data collection and management procedures, and their rights. We conducted interviews only after obtaining informed consent, with measures to ensure anonymity and confidentiality.
Table 1. Background information of the interviewees
Source: Compiled by authors.
We conducted semi-structured interviews with interviewees focusing on responsibility allocation, relationships with governments, coordination challenges, and their causes in PPPs. Additional materials used include field notes, policy documents, publicly available government documents on PPP projects (e.g., evaluation reports), and media news. These materials helped contextualise the institutional and policy arrangements in Guangzhou, provided background knowledge prior to fieldwork, and were used to triangulate interview findings. We conducted a content analysis of the data using two coding frameworks. The first one is informed by NPM and NPG literature discussing contractual (roles and responsibility) and relational aspects (relationship and interaction) of PPPs; the other concerns challenges in PPPs and their contributing factors, categorising into institutional and strategic complexities. The transcripts were imported into MAXQDA and coded into different themes, which are summarised and explained in the ‘Results’ section.
Results
Roles of state and non-state actors in PPPs
Although the central government does not directly engage in PPPs, it plays a critical role in shaping local governments’ and non-state actors’ responses through political incentives and policy signalling. The recent launch of The 2020 Plan in Guangzhou requires substantial investment from both the local governments and service organisations. The municipal government aims to establish at least one comprehensive elder care service centre in every sub-district by 2025. The fact that each centre needs to be over 1,000 square metres and capable of delivering a diverse range of professional HCBS requires substantial financial and personnel investment. To achieve such goals, the sub-district government allocates approximately half a million RMB per centre annually through public procurement. However, since the funding does not cover decoration and equipment costs, most interviewees noted that service organisations usually need to invest an additional 50 per cent to 100 per cent of the public funding amount to meet establishment requirements, in addition to meeting other professional qualifications.
In 2016, the Ministry of Civil Affairs and the Ministry of Finance designated Guangzhou as a pilot city to experiment with HCBS development. Policy experimentation serves as a mechanism for the central government to encourage local policy innovation while also providing opportunities for local bureaucrats to gain political recognition within the cadre evaluation system (Teets, Reference Teets2015). This dynamic partially explains the substantial investments made by local governments in HCBS development. Most interviewees agreed that HCBS provision in Guangzhou has experienced a notable increase, with a substantial growth in private organisations’ participation. Despite the substantial initial investment required to establish a PPP elder care service centre and the early-stage development of the industry, where clear, mature, and profitable business models are still lacking, interviewees frequently cited the central government’s consistent policy emphasis on HCBS sector development and service market liberalisation as the main motivation for their proactive responses.
Most private enterprises consider PPP both a branding opportunity and a strategic entry point to expand their market share. They are optimistic about the growth potential of HCBS, largely because the central government’s strong policy emphasis signals continued support and future opportunities in the sector (G7T).
The sub-district government is the commissioner, and the municipal and district governments design the service contracts, including facility and staffing requirements, budgets, service contents, and evaluation criteria. While the contracts continue to rely on quantitative indicators driven by the motivation to prioritise measurable political targets, there are emerging concerns that this practice may undermine service quality and responsiveness to social needs.
In many cases, government purchase of social services instead leads to unhealthy competition. Assessment criteria that focus heavily on quantitative indicators discourage service providers from investing in service quality. Private enterprises, especially, prefer to use as few resources as possible to meet these metrics ‘efficiently’. If you choose not to conform to this approach, you are placed at a disadvantage in the bidding process (G1F).
NGOs, particularly social work agencies, had been the primary service organisations engaging in PPP for community services in Guangzhou before 2016 (Chan and Lei, Reference Chan and Lei2017; Lin, Reference Lin2017). Their non-profit nature and social value orientation made them suitable partners when PPP policy objectives focused on meeting the basic needs of the most disadvantaged populations. However, recent reforms in the HCBS reflect a policy shift aimed at expanding service availability to a larger population, in response to population ageing and increasing pressures on families to provide care. This shift raised the expectations placed on service organisations, requiring substantial financial investments to meet new facility standards, staffing qualifications, and professionalised service demands in areas such as long-term care and healthcare. Most grassroots NGOs, particularly social work agencies, which operate on a smaller scale and rely heavily on government funding, lack the financial and professional capacity to meet these new requirements.
Yes, many NGOs we worked with before are stepping down from service provision. However, our focus is never on whether the service organisation is for-profit or not-for-profit. Our priority is whether they can provide qualified services as required by the policy (G8T).
Although there are other funding sources, such as social venture funds, besides those for the comprehensive elder care service centres, they operate on a much smaller scale and typically support complementary services rather than core HCBS provision. Despite these constraints, NGOs are exploring ways to reposition themselves within the service landscape by developing niche, yet professional, knowledge-intensive services. Interviewees from small-scale grassroots NGOs mentioned they are redirecting to services such as dementia screening, anti-fraud campaigns, and other services that cater to the needs of active older people and can make good use of community resources and the trust they have accumulated over years of community engagement.
While PPPs appear to be formalised through contractual arrangements and incorporate typical PPP features associated with NPM, such as competitive tendering and performance evaluation, these formal elements are embedded within a specific political regime. The eligibility and evaluation criteria are not only administrative; they also aim to align service delivery with state-defined policy priorities and reflect local governments’ political incentives. While PPPs are often designed as policy tools to enhance efficiency and accountability in service delivery, in the Chinese context, they also function as political instruments for mobilising and governing social resources (Mok et al., Reference Mok, Chan and Wen2021).
Relationships between state and non-state actors in PPPs
Despite recent reforms in Guangzhou’s HCBS sector, NGOs’ reliance on government funding remains unchanged, and as a result, their relationship with local authorities continues to be one-way dependent. On the other hand, with the substantial resources private enterprises invest in PPPs, they perceive a relatively more equal relationship with the government in service operations.
Based on my previous experience working in an NGO, our organisation functioned more like an extension of the government, and the government exercised significant influence on our operations. However, in my current role at a private company, I feel that our relationship is more akin to a partnership, with greater autonomy in our day-to-day activities. This shift is primarily due to the substantial resources we have invested in PPP projects, with government subsidies accounting for only a small portion of the overall investment (G5F).
However, operational flexibility should not be mistaken for an interdependent partnership in PPPs. Such significant resource investment of service organisations did not change how service organisations’ negotiating power in the contract contents, evaluation requirements, or their influence in the policy-making process. Most of the interviewees, whether from NGOs or private enterprises, believe that in PPPs, they are policy takers under the framework set by the government. The formal governance structure remains largely state-steered, with non-state actors positioned primarily as policy implementers with limited influence in the policy decision-making process. While there are formal mechanisms for service organisations to communicate community needs to government authorities, some interviewees questioned the effectiveness of these channels and the extent to which their input influences decision-making.
Several years ago, I brought up this problem (welfare recipients that the local government identifies may not be those most in need of HCBS) in a seminar organised by the Guangzhou Civil Affairs Bureau. They also recognised there is a need to increase eligibility flexibility, but until now, this issue has remained unsolved (G3Fa).
While private enterprises may enjoy more operational autonomy than NGOs, both have limited influence in policy decision-making. Non-state actors tend to position themselves primarily as policy takers and implementers, underscoring a hierarchical nature of state–non-state relations in PPPs. This dynamic diverges from the horizontal partnerships envisioned by NPG, which emphasises shared decision-making power and interdependence among diverse actors (Klijn and Koppenjan, Reference Klijn and Koppenjan2000; Newman and Clarke, Reference Newman and Clarke2009; Osborne, Reference Osborne2010) but instead aligns more closely with a principal-agent relationship.
Nevertheless, given the government’s central role in society and the high level of public trust in public institutions in China (Cunningham et al., Reference Cunningham, Saich and Turiel2020), cultivating close relationships with local governments is considered critical for service organisations. From a pragmatic perspective, several interviewees noted that decisions on PPP contracts are not always made in a fully transparent manner, and sub-district governments’ preferences and political needs can significantly influence contracting decisions. Moreover, PPPs are also considered as branding opportunities, which could be particularly important for private enterprises when they are entering a quasi-welfare sector. Actively participating in PPPs serves as a long-term business strategy to build public trust, gain government recognition, and expand market influence under the potential of policy-driven industry growth.
Coordination challenges in PPP implementation
Over the past decade, HCBS in Guangzhou have expanded rapidly, largely driven by the promotion of PPPs and broader welfare socialisation reforms. While the goals of PPP are to expand service coverage, diversify service delivery, and improve service quality, these objectives are not achieved automatically through the formation of PPP alone. In fact, PPPs in Guangzhou’s HCBS sector are facing challenges in achieving these expected benefits. Drawing on key coordination challenges frequently raised in the interviews, we examine the institutional fragmentation and strategic behaviours that shape challenges in PPP coordination. By situating these challenges within the broader political and social context, we offer a more nuanced understanding of the limitations and complexities of PPPs in China’s HCBS sector.
The recent development of PPP-based HCBS community centres in Guangzhou represents an important shift toward more diversified and integrated service provision to address the comprehensive needs of older adults and their families. These centres are expected to offer a wide range of services, including rehabilitation care, personal care, hot meals, medical services, daycare, respite care, spiritual support, palliative care, assistive equipment rental, home modifications, recreational activities, and emergency assistance. However, achieving such integration requires more than contractual arrangements alone; it also underscores the importance of effective coordination that shares resources and accountability across different sectors or departments. These requirements pose particular challenges under China’s Tiao tiao-kuai kuai administrative structure (Lieberthal, Reference Lieberthal1997). This structure determines that the implementation of any policies entails collaboration between authorities over various sectors that coordinate according to functions (tiao) and governments of the jurisdiction at the local level that are responsible for resource allocation, addressing social needs and overall development of where they govern (kuai).
For instance, integrating health and long-term care has been emphasised in HCBS development, but progress has been incremental because they operate under separate financial arrangements and regulatory frameworks and are managed by siloed departments. These systemic challenges require strong cross-sectoral coordination, which is not usually inherent in the tiao-kuai administrative system (Lieberthal, Reference Lieberthal1997).
We (Civil Affairs system) have been finding ways and channels to strengthen cooperation with the Health Commission system in providing HCBS. But after all, we are under different functional systems, without more formalised managerial arrangements from the upper-level government, it is hard to put this aspiration in place (G8T).
Challenges in realising the surplus benefits of PPPs also stem from implementation gaps created by vertical institutional fragmentation. While the civil affairs department establishes overarching standards and the evaluation framework, the authority to contract services and allocate resources lies with district governments. This flexibility is intended to allow adaptation to local situations. However, as social welfare is usually a relatively lower priority for local cadres (Li and Zhou, Reference Li and Zhou2005), local governments tend to achieve these targets strategically, prioritising measurable indicators over substantive service improvement. At the same time, the functional authorities that define long-term policy goals and standards lack direct leverage over the political incentives that drive local governments’ behaviour. Therefore, this vertical discrepancy leads to inconsistent application of standards by the PPP commissioners (local governments), undermining incentives for non-state actors to focus on improving service quality.
Local government’s priorities substantially influence which organisations get contracts and how they evaluate performances. Therefore, functional governments (ministries and departments) are in a relatively passive position in PPPs. Professional standards set at the ministry level are not always prioritised in local implementation, which also contributes to an unhealthy competition environment for PPPs (G1F).
In addition to institutional barriers, different values and motivations of actors could also divert PPPs towards achieving mutual goals. Under the current policy arrangements, community elder care service centres operate in a hybrid mode: government procurement secures the needs of the most disadvantaged older people while service providers can offer additional fee-based services under government pricing guidance. Ideally, this dual model is intended to expand service offerings and gradually build a HCBS system capable of meeting the needs of households across different income levels, particularly the underserved middle-class families. However, a critical obstacle identified by service providers is the lack of effective demand to incentivise investment in higher-quality and innovative services. This demand deficit is closely tied to policy communication and broader ideological narratives.
Extensive coverage and meagre benefits are widely recognised in the literature as key features of China’s welfare system (e.g., He et al., Reference He, Li, Huang, Ellison and Haux2020), and public-funded HCBS follow this pattern. The public-funded HCBS have strict eligibility requirements on household income, family support capacity, and functional limitations (Guangzhou Civil Affairs Bureau, 2020). Meanwhile, the subsidies range from 200 to 400 RMB per month, which constitutes roughly 15 per cent of the city’s minimum wage. The government’s emphasis on extensive geographical coverage of HCBS in policy discourse, combined with the ideological legacy of socialism that stresses social equality, creates inflated public expectations on the government’s commitment to welfare responsibilities, causing many people to mistakenly perceive that their basic needs are already secured. This gap between rhetoric and implementation discourages willingness to pay for services; in fact, most services used in HCBS centres are government-funded. As a result, providers, particularly private enterprises, become reluctant to diversify services or pursue innovation in the absence of clear returns or guaranteed profit margins. The leading role of the state in defining the policy and social environments, combined with ambiguous messaging and strategic behaviours from both sides of the partnership, thus constrains the development of a more responsive and sustainable HCBS sector that PPPs could have facilitated.
When most people believe fee-based services are unnecessary, the market lacks sufficient effective demand. Operating within an inactive and fragmented market, we lack the incentive to invest in improving service quality, innovating care models, or addressing the different needs across income groups (G1F).
Discussion
By analysing the contractual and relational dimensions of PPPs in Guangzhou, we revealed that state actors’ policy goals and political motivations play a critical role in shaping PPP formation and implementation, significantly influencing the relationships between state and non-state actors. Non-state actors generally perceive themselves as policy takers. In PPPs, their roles are primarily instrumental, assisting the state in achieving predefined welfare objectives. The examination of coordination challenges reveals how the unique political and social context in China complicates the realisation of the full potential of PPPs. The blurred boundaries between the Party, the state, and society create considerable obstacles to effective coordination both across and within sectors and restrict the ability of PPPs to effectively leverage the expertise of different actors.
PPPs in China function primarily as a strategy for the central government to mobilise local authorities and non-state actors to expand welfare service capacity in response to growing social needs (Mok et al., Reference Mok, Kühner and Huang2017). In Guangzhou, the drive towards achieving geographical full coverage of HCBS provision and increased for-profit organisation participation represents local governments’ efforts to align with the central government’s policy directives aimed at expanding elder care service provision and promoting market mechanisms. However, despite the appearance of formalised PPP arrangements, the underlying logic of implementation is driven more by political incentives, focusing on measurable indicators. Under China’s cadre evaluation system, local officials are often rewarded for achieving visible, quantifiable outcomes (Gao, Reference Gao2015), such as service coverage, infrastructure scale, and delivery volume. As a result, despite the introduction of competitive tendering, market mechanisms, and increased non-state participation, the observed gains in HCBS capacity remain mainly quantitative rather than qualitative.
In PPPs, non-state actors continue to play instrumental roles in service delivery (Howell, Reference Howell2019; Mok et al., Reference Mok, Chan and Wen2021). Our empirical findings reveal notable differences between NGOs and private enterprises in their capacities, resources, organisational logics, and engagement strategies; however, their relationships with state actors share more similarities. NGOs continue to rely heavily on public funding, and the recent policy changes do not alter this one-sided dependency. Financial constraints and limited autonomy hinder their ability to build capacity to meet evolving social needs and policy priorities. Consequently, many are shifting towards small-scale, niche services that can leverage their community networks and expertise. In contrast, private enterprises possess stronger professional and financial capacities, making them preferred partners for delivering a more diverse range of HCBS. Their substantial investments grant them greater operational flexibility, yet their ability to influence policy decisions or negotiate contractual terms in PPPs remains as limited as that of NGOs. Participation in PPPs nonetheless provides non-state actors with valuable benefits, including access to government resources, enhanced public trust, and increased political legitimacy, which continue to shape their incentives for engagement.
Previous literature has highlighted the challenges NGOs face with the introduction of market principles of PPPs, such as competitive pressures that favour larger, government-trusted NGOs, and bureaucratisation that strains their already limited organisational capacity (Enjuto Martinez et al., Reference Enjuto Martinez, Qu and Howell2022). Institutional controls on funding and autonomy are also frequently cited as explanations for the persistence of state-led governance in these partnerships. By including private enterprises in our analysis, we extend these explanations to demonstrate that non-state actors also face challenges in PPPs due to the state’s selective application of market principles. To strategically survive and thrive, we see how policy signals influence the decisions and strategies of private enterprises. Besides, the market environment itself is not fully autonomous due to state influences, limiting the realisation of market advantages such as efficiency, innovation, and user choice.
Our examination of coordination challenges in Guangzhou’s PPPs identifies familiar issues of institutional fragmentation and value misalignment among actors, as documented in international PPP studies (Klijn and Teisman, Reference Klijn and Teisman2003; Lægreid et al., Reference Lægreid2015). However, in China, these challenges are compounded by the power imbalance inherent in the sociopolitical context, which obscures the boundaries between the Party and the state, as well as between the state and society (Shi, Reference Shi2017; Mok et al., Reference Mok, Chan and Wen2021). The governance structure and state-society relationship feature strong hierarchical logics that constrain the development of the horizontal, trust-based, and interdependent relationships essential for effective PPP coordination (Klijn and Koppenjan, Reference Klijn and Koppenjan2000; Newman and Clarke, Reference Newman and Clarke2009; Osborne, Reference Osborne2010). This remains a key barrier to achieving the synergetic effects of PPP, which can benefit from both contracts to clarify roles, responsibilities, and accountabilities, and relational governance, which supports flexibility, negotiation, and mutual adjustment among actors in the policy process (Klijn et al., Reference Klijn, Koppenjan, Warsen and Meek2021).
Conclusions and policy implications
This research contributes to the literature by illustrating how PPP dynamics unfold within China’s authoritarian state-led market context. By explicitly considering private enterprises alongside NGOs, our study expands existing knowledge on the engagement of non-state actors in PPPs in China. While existing scholarship has primarily focused on NGOs, the prevailing role of the state has been discussed mainly in relation to political institutional mechanisms, such as state control through GONGOs, financial constraints, and limited autonomy of NGOs. By including private enterprises and analysing recent market-oriented reforms in the HCBS sector, we demonstrate how the neoliberal features of PPPs are also constrained by state steering. Unlike PPP arrangements in liberal democracies, private enterprises and NGOs in China have limited influence over the policy areas where they operate. Therefore, PPPs in China remain primarily state-led and are driven predominantly by governmental welfare strategies, with non-state actors serving mainly as policy takers and implementers.
Challenges in coordinating PPP are shaped by China’s political and social context, where blurred boundaries between the Party, state, and society reinforce power asymmetries and hierarchical relationships. Consequently, while PPPs have enabled rapid growth in service capacity, they struggle to leverage the potential benefits of non-state sector expertise and market innovation, limiting their capacity to deliver integrated, high-quality, and user-centred HCBS. While achieving synergy in PPPs remains a global challenge, our research highlights the unique characteristics of China’s PPP model and underscores the importance of situating analysis within broader institutional contexts.
This research has several limitations that should be acknowledged. First, access to government interviewees, such as civil affairs authorities and sub-district officers, was limited, which may have constrained the depth and accuracy of our insights into government intentions and internal decision-making processes. Second, although introduced by mutual acquaintances, the tight interview schedule (approximately 60 minutes) may have limited opportunities to establish deeper trust and may have affected the interviewees’ willingness to share their opinions more openly. Finally, the fieldwork was conducted in early 2021, shortly after the implementation of the 2020 Plan, when the HCBS sector was undergoing a significant transition. At that time, more private enterprises were beginning to enter the sector, while NGOs were adapting to the new policy direction. Accordingly, our findings capture the realities of this initial stage of policy implementation. As partnerships continue to evolve, new interactions, tensions, and adaptive strategies among actors are likely to emerge and could potentially provide further insights into the dynamics of PPP. To address these limitations, future research should incorporate perspectives from state actors to provide a more comprehensive understanding of government rationales on decision-making. Examining how NGOs and private enterprises may diverge (or converge) in their strategies, roles, and relationships with state actors as the current PPPs mature also deserves further investigation.
To improve the effectiveness of PPPs in China, it is essential to develop regulatory frameworks that are transparent, consistently applied, and adaptable to evolving social needs, fostering a healthy competitive environment. The increased diversity of actors, expansion of service capacity and scope, and the incorporation of market mechanisms underscore the need for clear and coherent standards for PPP procurement, implementation, and evaluation. In addition, strengthening relational governance, grounded in communication and trust-building, can enhance coordination and mutual understanding among actors. Formal and informal communication platforms can facilitate intersectoral dialogue, cultivate trust, and lay the foundation for more effective collaboration, which could be crucial for delivering integrated social services like HCBS. Equally important is providing non-state actors with greater involvement in policy-making processes, which can enhance responsiveness to diverse social needs, stimulate service innovation, and better leverage their expertise in achieving welfare goals.
Acknowledgements
We sincerely thank all the interviewees for sharing their time, knowledge, and experiences. Their insights were instrumental in enriching this study. We also extend our gratitude to the anonymous reviewers and the editor for their insightful and constructive comments, which significantly enhanced this work.
Author Contributions: CRediT Taxonomy
Zilin Li: Conceptualization, Data curation, Formal analysis, Investigation, Methodology, Validation, Writing - original draft, Writing - review & editing.
Stuart Gietel-Basten: Conceptualization, Methodology, Supervision, Writing - review & editing.
Funding
None declared.
Open access
