This article contributes to the literature on the economic impact of ecotourism in regional China with a focus on Yunnan and Sichuan provinces, which attract about 50 per cent of the total number of tourists visiting China annually. Our analysis suggests that tourism significantly contributes to value added, output, income and employment generation in Yunnan and Sichuan provinces, although the level of contribution varies between the two provinces. For example, the impact of an additional tourist dollar would be higher in generating employment and household income in Yunnan province, while the same dollar has a higher impact in generating value added in Sichuan. While in both provinces international tourists generate much higher income per capita than their domestic counterparts, in comparison with Sichuan, Yunnan is considered to be better placed for further development of tourism, particularly ecotourism. The promotion of ecotourism in these provinces will also encourage the Chinese youth to stay in their own provinces rather than to migrate to export-processing provinces—a problem that has already created a concern among the Chinese policymakers.