The phenomenon of numerous non-governmental organisations (NGOs) emerging and cooperating with local governments under China's one-party authoritarian regime has puzzled many observers. Moving beyond the debate on civil society and corporatism, this article seeks to explain why and how local governments and NGOs collaborate within a performance-based framework, arguing that performance-based decentralisation motivates local governments to collaborate with NGOs and that the performance-based empowerment determines how local governments and NGOs cooperate. Case studies drawn from Shanghai city and Ningbo city suggest that when local governments become aware that the performance of the NGOs can contribute to local development, they develop a strong desire to start the collaboration process and empower the NGOs: the better the performance of the NGOS, the more empowerment the NGOS are granted by local governments. In this article, improvements in the performance-based collaboration between local governments and NGOs are also discussed in the context of extending the role played by NGOs in Chinese society.