Rapid growth has occurred in tourism to China since 1978 and although 1989 resulted in a large reduction in the number of external visitors to China, resumed growth since then has established new records for levels of tourism arrivals in China. In addition, a new attitude to the development of domestic tourism emerged in 1992. China has decided to increase the relative size of its tertiary sector by the year 2000 and is to encourage the development of domestic tourism. Expansion of foreign tourism to China was needed because of China's opening up to the outside world and has been encouraged. Nevertheless, some difficulties have emerged in its tourism development. These include (1) inadequate attention to demand (2) unbalanced growth with associated strains on infrastructure.(4) in some cases, overly generous concessions to foreign investors and (5) economic wastes or losses arising from political and bureaucratic control over the development of the industry. Tourism is now being treated as a leading industry and particular care will be needed to avoid economic mistakes. On the whole, the development of the industry has not counteracted uneven regional development in China but has reinforced it. A study of tourism development in Xishuangbanna Prefecture suggests that even at this local level, tourism development tends to be relatively centralised. Opportunities for Australia and Australians from the expansion of the Chinese tourism industry are discussed.