The 5.8 magnitude quake, which struck at 12:04pm GMT, was centered on Benzilan town in Yunnan province on the border with Sichuan province, the US Geological Survey (USGS) said.
It struck at a shallow depth of about 10 kilometres.
The official Xinhua news agency said one person was killed and three seriously injured after their tourist bus was hit by falling rocks from a landslide.
"During the earthquake this morning, the swaying the county felt was relatively severe," Xinhua quoted Liao Wencai, deputy party secretary of Deqin county, as saying.
Benzilan is in Deqin county, roughly 60 kilometres from Shangri-La county which is named after the fictional mountain paradise in the James Hilton novel "Lost Horizon".
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