Despite the fact that the last three decades have witnessed the rapid development of rural tourism (RT) in China, which is being promoted by the Chinese government as an important new type of tourism due to its special role in revitalizing China's rural economy, there is still little knowledge about the economic impacts of RT on Chinese rural communities in terms of socio‐economic development and regeneration. Accordingly, this study represents an attempt to address this issue by examining the Poverty Alleviation through Tourism program and ‘Nong jia le’ (Happy Farmer Home) tourism within the Chinese context. The findings not only confirm the widely held importance of RT, as expected, but also identify the problems and challenges relating to the sustainable development of RT in the future. Copyright © 2012 John Wiley & Sons, Ltd.