The 400 m ha of grazing lands in China, mainly across the north and west of the country, have similar problems to those throughout the steppe of Mongolia, Central Asia and neighbouring countries. The grasslands are in drier regions (50–500 mm) across mainly Inner Mongolia, Xinjiang, Tibet, Qinghai, Gansu and Sichuan, often at higher altitudes on the Tibetan, Mongolian and Loess Plateaus, and have for millennia supported the livelihoods of millions of herders. By 2002, surveys were classifying 90% of the grasslands as degraded. Less than 10% were considered desertified to the extent that replanting was the only option to restore some plant cover. The majority of the grasslands were considered capable of being rehabilitated to some degree through changing management practices. In the 1980s the first Grassland Laws were promulgated, initiating a series of programs aimed at rehabilitating the grasslands. These programs included the establishment of individual ‘user rights’ to herders to use a defined area of grassland and the imposition of grazing bans, often for five years, to rehabilitate degraded areas. These were often applied at a regional level. At the same time, herders were encouraged to have more livestock as that was seen as a pathway to lift them from poverty. The sheep equivalent of grazing animals for the whole of China, has increased 4-fold since 1949, often by greater amounts in some regions. But there was very limited work done on how best to manage grazing livestock in ways that could aid grassland rehabilitation. In the early 2000s a collaborative program was started between several Australian and Chinese Institutes, to investigate better ways of rehabilitating the grasslands and to improve herder incomes from livestock. This work involved the development of four models that could use the limited data available, to help guide a series of research programs. These models indicated that halving stocking rates could maintain or increase herder net incomes. Farm demonstrations showed this result applied in practice and grasslands did improve. A series of grazing experiments found that halving the current stocking rates was needed to enable the survival of the better plant species within the grassland. A model that estimated the net value of each animal indicated that often half the animals were generating marginal or negative incomes, and could be culled without affecting the household income, again substantiated in farm demonstrations. In this paper, the causes of degradation, which can be traced back to the progressive changes that have occurred in China since 1949, are discussed together with the practice changes that have come from a large collaborative research program between Australia and China. Efficient markets and land tenure reform are needed to help create the incentives for herders to change in sustainable ways.