Authorities in Dukezong, the Tibetan town in Yunnan province that was largely destroyed in a fire over the weekend, said it was unlikely the blaze was started deliberately.
The possibility of arson has been mostly ruled out but an investigation was still under way, Xinhua reported.
Some people living in the town in Shangri-la county, which is about 1,300 years old, have questioned the speed of the response of emergency services.
A 30-year-old woman, who gave her surname as Wang, said that when she arrived at the scene of the blaze at 3am on Saturday, more than an hour after the fire had started, there were only two fire engines in the area. They had not begun spraying water on the flames, she said.
Other residents said firefighters arrived 30 minutes after the blaze broke out.
Chen Tianchang, a fire captain, told Xinhua that firefighters were at the scene in five minutes but that there were delays in tackling the blaze.
He said the old town did not have any firefighting equipment until several years ago and that water pipes were built above ground so as not to damage the town's historic character.
"To avoid water in the pipes freezing and breaking them, no water was stored in them. So it took time to fill them with water," he said.
Wang said: "I'm not sure why, but they only began hosing the fire about 15 minutes after I arrived, that's about 11/2 hours after the fire had broken out … Nothing is left. Luckily nobody was hurt. The old town will never be the same again."
A building she owned, which had been let out as a cafe and bar, was destroyed in the blaze.
She said her losses could well run into millions of yuan.
Watch: A CCTV news report on Shangri-La fire
No injuries were reported in the blaze, but at least 2,600 people were evacuated from three neighbourhoods of the town with cobbled streets.
At least 240 buildings burned down, affecting 335 households. Cultural relics and Tibetan art works were destroyed. The cost of the damage was initially put at more than 100 million yuan (HK$128 million).
The fire broke out at 1.30am on Saturday morning and took just under 10 hours to bring under control, Xinhua reported.
Most of the houses were made of wood and the windy weather made the fire spread quickly, Zhang Zhijun, deputy chief of Deqen Tibetan autonomous prefecture, was quoted by Xinhua as saying.
"About 2,000 professionals were deployed to fight the fire, which was burning wildly and causing chaos," he said. "The fact that nobody was hurt shows the way it's handled was scientific."
Chen Limei, who works at a hotel 500 metres from the blaze, said that because tourists would probably avoid the area, some hostels were allowing homeless residents to stay for free.
"It's really cold out there so people need help," she said.