The Environment Conservation and Poverty-Reduction Programme in Ningxia and Shanxi aimed at sustainable and equitable poverty reduction for 300,000 vulnerable rural households living in an environment with a fragile and deteriorating natural resource base. A large number of these impoverished households belonged to the Hui ethnic minority. The programme used a multisectoral approach to address the main causes of poverty within a fragile environment. Programme activities were implemented in the context of wider Government efforts to reduce poverty in the region. The scale of the concerted efforts enabled a far-reaching transformation of the rural landscape, with significant improvements in basic education and health services, and consolidation of the natural resource base. Value was added through the consistent efforts to target programme benefits to the poorer households, in particular women. Although it has delivered a number of results, the programme failed to stand up to its original intention and purpose. In particular it did not deliver the transformative approaches or innovative practices that could have informed ongoing Government programmes and policies for poverty reduction in environmentally sensitive areas. Analysis of the factors limiting the relevance, effectiveness and impact of this programme highlights the need for IFAD to keep abreast of China's rapid development.