It is internationally recognized that conservation policies should respect indigenous cultures and consider the livelihoods of people affected by conservation restrictions. Countering this are concerns that human occupation and use of natural reserves is incompatible with conservation aims. But in China today the continued use and management of natural areas by local communities is likely to deliver better conservation outcomes than the current drive to establish public protected areas. The effectiveness of many protected areas in China is compromised by institutional conflicts, lack of ongoing financial and technical support, confusion between the objectives of generating revenue and conservation, dubious scientific definitions, lack of community trust in policies, and obscure user rights and land tenures. Southwestern China-one of the most biologically and ethnologically diverse areas on Earth-is a good illustration of a place where culture and biological diversity are closely linked. The indigenous people in this area have shown that local livelihood practices can be advantageous for the long-term maintenance of conservation goals. Rather than creating new protected areas, we argue that China is better advised to support ongoing sustainable use of natural areas by the people who have lived and nurtured these environments for generations.