I've heard recent chatter suggesting that Tibet is going to become easier and cheaper for foreigners to access in the near future (i.e. permits still required, but no more guide requirement). That having been said, this is a rumor that has come and gone several times over the years (much like that mythical Maglev extension to Hangzhou idea).

In any event, apart from Tibet, western China is still quite inexpensive. A friend of mine just returned from a two week trip to Yunnan (Lijiang, Dali, Shangri-La, etc.... the standard stuff). His total trip cost = y5000. When you consider the fact that it costs at least y3000 to get to Lijiang and back (by airplane, of course), that means he ended up spending less than y150 per day (shared hotel rooms with one other person), which is pretty remarkable today. Oh, and he me pictures of his hotels, decent looking places.