In the context of genetically modified crops expressing the Bacillus thuringiensis (Bt) toxin, a ‘refuge’ refers to a crop of the same or a related species that is planted nearby to enable growth and reproduction of the target pest without the selection pressure imposed by the Bt toxin. The goal of this study is to discuss the role of natural refuge crops in slowing down the buildup of resistance of cotton bollworm (CBW), and to evaluate China’s no-refuge policy for Bt cotton. We describe in detail the different factors that China should consider in relation to the refuge policy. Drawing on a review of scientific data, economic analyses of other cases, and a simulation exercise using a bio-economic model, we show that in the case of Bt cotton in China, the no-refuge policy is defensible.