This report is a part result of the research project: Land Policies, Land Management and Land Degradation in the Hindu-Kush-Himalayas. The report is mainly concerned with the land degradation and its relation, through land use and land management, with land relevant policies; these include environmental policy, agricultural policy, land policy, forestry policy, natural reserve policy, and population policy in the Chinese Himalayas. Luquan Yi and Miao Nationalities Autonomous County, located in Western Yunnan, is selected as a study case. Shangyan village in this county has been studied in particular, using an anthropological approach. As a background and context, the policy process and land degradation status at national and provincial levels are also investigated. The process of land degradation can be regarded as the comprehensive result of mutual interaction between the physical process and human activities. In developing countries, land degradation and poverty are closely linked. Land degradation is not only an environmental issue, but also a social issue. The most urgent problem in regions in which there are areas of degraded land is securing resources for basic living. Thus degraded land should be reconstructed (not just rehabilitated) so as to have a high and stable yield and ensure grain supplies and basic needs. Reconstruction is a man-made alteration that accelerated the development of the landscape to bring about balance. The process of reconstruction requires large-scale social investment to bring about rapid change in degraded lands. In order to escape the spiral of impoverishment-degradation, it is necessary for local people and leaders to be innovative and for government to transform institutions and policy.