The rise of the third sector has been a global welfare phenomenon. In China, the growth of social organisations has been a remarkable feature of the transitional society after the adoption of market reforms and political liberalisation. In its emergent welfare economy, the third sector has been hailed as a new growth point in social care as the state retreats from direct provision of welfare services. This article examines non-state care homes for older people in urban China based on a survey of 137 homes in three cities. It begins with a brief review of the theory of the third sector, non-governmental organisations and private markets in the production of welfare. This is followed by a discussion of third-sector organisations, markets and the state in the special context of China. The next section appraises the factors that contribute to the surge of non-state residential provision for the elderly. The final part of the article presents empirical findings on the development, key features and authority relations of 137 non-state care homes for older people. It is argued that their uniqueness marks them out as a special form of third-sector organisation in China's welfare economy.

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