There are a lot of small ancient towns and small cities which leave the traces of Chinese long history and profound culture. Here I recommend top 5 small cities and towns worth visiting for your reference.
1. Lijiang in Yunnan

The Ancient Town of Lijiang is on the World Heritage List of UNESCO. Every ethnic group in Lijiang has a special festival, such as the Naxi people’s Sanduo Festival and the Yi people’s Torch Festival. The Lijiang UNESCO site is well known for its well-preserved ancient buildings and the distinctive Naxi culture. The aged wooden buildings decked with hanging red lanterns, and local musicians playing centuries-old Naxi instruments in the time worn streets, display a lifestyle and culture that seems lost in time. It is an idyllic place that seems far away from the cement, steel and busyness of the new section of the city. Lijiang is the gateway to many other tourist attractions in the region.
2. Pingyao in Shanxi

Pingyao is an ancient city that was named a World Heritage Site in 1997. Pingyao’s city wall has a perimeter of 6,163 meters, about 12 m high. The wall encircles an area of about 2.25 square kilometers, and separates the city into two worlds with different styles of structures. Inside the wall, the streets, pavement, structures, and about everything else retain the styles from Ming and Qing Dynasties. Outside the wall are the new the modern buildings. You can see and enjoy many things with Chinese characteristics, such as stamp number, native bank, pawnshop, traditional Chinese medicine shop, and silk fabric shop, variety store, and fan, lantern, theatrical costume store.
