In the last two decades, the Chinese government has made serious attempts to enhance social provision by contracting out social services. Empirical evidence suggests that openness and flexibility of resource allocation gradually decrease from Guangzhou in southern China to Beijing in northern China, amongst China’s three first-tier cities. This study further reveals that state–non-governmental organisation (NGO) relations vary not only across geographical locations but also amongst service sectors governed by government departments and mass organisations. The varied state–NGO relations across geographical locations and service sectors manifest the complexity of the state–NGO collaboration under China’s fragmented authoritarian governance system. Different local circumstances and diverse considerations of local officials involving vertical and horizontal lines of authority accounted for the variations and complexity from the eyes of NGO practitioners.

China's economic reform since 1978 has turned a shortage economy into an economy of overcapacity. To curb the capacity surplus, the government put forward a sweeping proposal of “supply-side structural reform,” although without any specifics of implementation. This vagueness has resulted in fragmentation between China's central leadership and local agents. Based on two rail delivery services – China Railway Express Delivery (Zhongtie kuaiyun 中铁快运, CRED) and China–Europe Rail Freight (Zhong–Ou banlie 中欧班列, CERF) – this article argues that fragmentation in authority has allowed and even encouraged local actors to carve profit-making opportunities out of the excess capacities (including idle assets). In so doing, they give substance to what would otherwise be hollow policy rhetoric. Such subnational entrepreneurialism and the resulting tacit dynamics between state and local-level actors add another layer to the fine-grained theorization of fragmented authoritarianism in China: despite fragmentation, China's authoritarian governance endures, but with outcomes now shaped by a cyclical process of decentralization and re-centralization as well as continuous central–local interplay.