Since early 2010s, China’s academic, religious and administrative authorities continuously argue that it is now time for China to carry out religious public diplomacy, with Buddhism as the tradition to be promoted. The idea is partially a response to China’s national strategic plan to extend her political power and influence to Southeast Asia and West Asia. Under this context, China strongly articulates that the Tai Theravada Buddhism in Yunnan, which is geographically connected to northern part of Thailand and Burma, can serve as a tool of religious/Buddhist public diplomacy to South East Asia countries, of China and for China. The present article is a critical response to the above argument. The revival of Tai Theravada Buddhism in 1980s in Yunnan will be examined against the background of the bargain between Tai’s transnational ethnicity and China’s authorities and her policy. The article is composed of four sections. Firstly, the argument for the so-called strategic implication derived from the Tai Theravada in Yunnan under China’s southward national policy will be examined. Secondly, the powerful impact on the Tai communities of Yunnan by the political-social-ideological “reformation” in 1950–1970s and economic “reformation” since 1980’s is discussed. The first part of the next two sections include a basic description of the current condition of the Tai Theravada monastic institution at Sipsong Panna, which is closely connected to Thai Samgha. Then there is a basic description of another Tai Theravada tradition at Dehong, which has extensive Burma background.