In this paper, the relationship between the political economy of tourism and ethnic cultural revival in southwest China is explored. It is suggested that cultural revival is a process of ‘place creation’ whereby identities may be consciously localized as a strategy for engaging structures of political economy which link local actors with broader geographical frameworks and more distant sources of power. Approaching the intersections between tourism and local cultural construction in this way reveals the inadequacy of Marxist analysis in theorizing the spatial relationship between political economy and culture. The theoretical argument has several prongs: (1) the local does not exist as an oppositional reality to the global, but rather constitutes a dynamic cultural negotiation with the changing structures of political economy, a negotiation in which dominant structures are mediated by individual agency; (2) ‘modernization’ is thus as much cultural as it is economic; (3) the traditional ‘space of places’, which a modern ‘space of flows' supposedly supersedes, is an idealistic construct of the past, based on a static conception of culture kept separate from a dynamic conception of economics; (4) historical materialism perpetuates this idealism in its preoccupation with the economic power of capital, relegating the cultural to a ‘response’. Last, the above approach makes it necessary to question the assumption that the ‘confused identities' of postmodernity arc the result of global capitalism's ‘annihilation of space through time’. Rather, a highlight upon the contentious nature of ‘place creation’ within broader systems of power suggests that identity has never been neatly provided by a naturally bounded place, but has always been negotiated within a complex and often confusing mesh of interaction across multiple geographic scales.