ABSTRACT China has been experiencing a boom in newly constructed ancient towns (NCAT). Under the influence of recent central policies, requiring heritage activation and cultural revitalisation, NCATs that were viewed as theme parks providing entertaining experiences have become a new type of heritage site. With a case study of Gubei Water Town, it is shown that under the name of revitalising traditional culture, ‘heritage’ is created following the decisions of the tourism developer based on tourist preference. We suggest that themed environments may aggravate the exclusion of local communities and reduce the possibility for bottom-up negotiations in the process of heritage interpretation. Also, the convergence of NCATs and ancient towns may speed up the decline in cultural diversity in China.