This paper examines the conflictive repercussions of exclusionary processes in the Tibetan areas of western China, with a focus on Qinghai Province and the Tibet Autonomous Region. In both provinces, the implementation of competitive labour market reforms within a context of severe educational inequalities is argued to have accentuated exclusionary dynamics along linguistic, cultural and political modes of bias despite rapid urban-centred economic growth and increasing school enrolments since the mid-1990s. These modes of bias operate not only at lower strata of the labour hierarchy but also at upper strata. The resultant ethnically exclusionary dynamics, particularly in upper strata, offer important insights into conflictive tensions in the region. At a more theoretical level, these insights suggest that exclusion needs to be differentiated from poverty (even relative poverty) given that exclusionary processes can occur vertically throughout social hierarchies and can even intensify with movements out of poverty. Indeed, the most politically contentious exclusions are often those that occur among relatively elite and/or upwardly aspiring sections of a population. Therefore, the methodological challenge that faces studies of exclusion (as with the horizontal inequality approach) is to find ways of measuring structural asymmetries and disjunctures and institutional modes of integration that move beyond either absolute measures, as per mainstream human development approaches, or relative measures, given that both are only capable of identifying potential exclusions occurring at the bottom of a social hierarchy.