China has the largest population of people with disabilities in the developing world. These people are identified as a vulnerable group, and as such, they have attracted increased attention from the entire society. The present welfare system in urban areas of China, which has been constructed through a long history of development, is an integrative system involving several service providers. The relationships among the service providers have attracted scholars’ attention. However, service users’ perspectives of their interactions with different service providers have garnered less focus. This study adopts both a historical and an interactional understanding of disability in an effort to examine the development of social welfare for young people with disabilities in China. The qualitative method used in this practical research focuses on the subjective experiences of individuals obtaining welfare. A review of the existing research is also conducted, focusing on policies for young people with disabilities in China. We examine the transitional process and analyze the themes underlying the policies for families in which there are people with disabilities in the present welfare system. Based on our findings, we discuss the evolution of service provision, especially in regard to the way in which it reflects the disabled community and the rational employment market; we reveal the involution of service provision for families, involving both ethical and functional considerations in familistic Chinese culture; and we analyze the dilemma regarding supportive policies for families in which there are people with disabilities in urban China. We also point out that the “individual” and the “family” cannot co-benefit in the implementation of current policies.