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Ordinary citizens often welcome nonstate provision of public goods and social welfare, but government officials, particularly in nondemocratic and transitional systems, may view nonstate actors as political competitors. Drawing on a combination of qualitative and quantitative data from rural China, this paper finds that some kinds of nonstate participation in public goods and social welfare provision can actually make local officials more optimistic about their ability to implement state policies and elicit citizen compliance. Local officials often believe that coproduction of public goods and services with community groups in particular, often with community actors taking the lead, can build trust and social capital that can spill over into increased citizen compliance with state demands, a central element of state capacity. Simply increasing levels of public goods provision, however, is not associated positively with …