The Palyu have not been included under any nationality in China. They were included in a generic list of Undetermined Minorities in the Chinese census. Palyu is this group's self-name. The Chinese and neighboring peoples call them Lai.

Although the Palyu are proud of their ethnic identity and are eager to preserve their customs, their language is gradually fading out and the people are fast being assimilated into the Han Chinese culture. According to Paul Benedict, the traditional homeland of the Palyu was in southwest Guizhou and southern Yunnan provinces, where the Palyu have assimilated to the cultures and languages of Yi groups.

The Palyu home is made of wood and consists of two stories. The lower area is for animals, while the upper level is where the family sleeps.

The Palyu have never been exposed to Buddhism, which many of the Mon-Khmer groups in western Yunnan have embraced. Instead, they practice animism and ancestor worship, and are careful not to offend the spirits they believe protect their communities.

Western Guangxi is one of the most gospel-neglected areas in all of China. There are a few believers in the region but none known among the Palyu. Rev. W. H. Oldfield, writing in 1922, said, "From Liuchowfu [Liuzhou] one may travel for twelve days either northward or westward without seeing a Gospel chapel or entering a district in which a witness is being given to the Gospel ... the districts surrounding these busy centers contain a large number of mixed tribesmen. These people are shut away from the rest of the province by huge mountain ranges. The greater part of this territory has not even been entered by a Gospel worker. No missionary in our province as yet speaks their language. To reach these people with the Gospel has for years been our hope and aim."