The characteristics of post-totalitarianism in the state-society relations result in that the government not only encourages industrial associations' development but also endows them with broad public functions of industrial governance. Whether the relations between government and industrial associations are clarified has a critical bearing on the willingness, ability and effect of performing public functions to industrial associations in Hangzhou and Wenzhou.It mainly results from the ill-defined relations between government and industrial associations. The transformation of functions from government to industrial associations should be based on the reasonable divisions of the public functions of industrial governance between government and industrial associations. Drawing on external experiences, a consideration can be adopted to create regional Chambers of Commerce and endow them with the status of public corporations, or to put industrial associations' status as independent corporations into effect, and at the same time, to constitute and perfect the institution of government purchasing services from industrial associations.