This paper concerns the impact of economic reform since 1978 on China's fifty‐five state‐recognized minority nationalities. The main arguments of the paper are: (1) that the nationality areas have been affected greatly by the reform policies, with raised standards of living; (2) that inequalities have widened both as concerns the comparison between the nationality and Han areas, and within the nationality areas themselves; and (3) that the processes of incipient modernization have tended more to integrate the country politically than to divide it.