This paper draws upon fieldwork among a Muslim community in the Qinghai-Gansu borderland areas to explore how the desire of Muslims to achieve social mobility through education is blocked by the larger society which regards them as ‘familiar strangers’. This can be understood as a tension between their desire for full social citizenship in the form of rights to employment and education and the limited social and cultural capital they possess that prevents them from achieving the former. This tension is primarily caused by the party-state's ambivalence over the project of state nation building and minority rights. By focusing on Muslim narratives of their experiences in the cultural exclusion, this case study attempts to scrutinize how the cultural exclusion affects the engagement of ethnic minorities in education as well as the larger society, although it has been recognized that the experience of exclusion varies between minority groups.