China has a long tradition of Confucianism, it has also been dominated by a communist ideology for a few decades. How did these different beliefs and principles influence its welfare system in the past? Towards which direction is the system shifting when the balance of power between the state (the dominant ideology) and society (with its own traditions) has been changed? This article analyses the case of ‘Foster Mother Villages’ and the Datong Social Welfare Institution. The case of Datong shows that, although the influence of official communist ideology was dominant in the overall system of child protection in China, traditional factors were also influential. The dominant role of official ideology has to be underpinned by financial support from the state. Where the government failed to provide the support, the traditional factor became dominant in the main institutional arrangements: that is the reason why institutional care failed to replace foster care in Datong city. In the past 50 years, spanning the eras of both planned economy and market reform in China, the Datong Social Welfare Institution has protected more than 6,500 orphaned, lost and abandoned children, and most of these children have finally achieved a normal family life.