Resolving trade-offs between economic development and biodiversity conservation needs is one of the defining issues of our time. This is crucial in currently developing countries and in particularly sensitive systems harboring high biodiversity. Yet, such a task can be challenging as human activities may have complex effects on biodiversity. Here we assessed the effects of intense economic development on different components of biodiversity using Hainan Island (South China) as model. This highly biodiverse tropical island has experienced intense economic development and extensive forest to agriculture conversion and urbanization across the last two decades. We characterized three main habitat clusters, based on local land use, climate and economic changes across 145 grids (10×10 km), and estimated avian biodiversity responses between 1998 and 2013. We recorded ongoing taxonomic biotic homogenization at the regional scale (i.e., the whole island), evidenced by decreasing differences between traditional and directional alpha diversity. Communities became overall phylogenetically clustered and functionally overdispersed. Biodiversity’s priority effects were pervasive, with less diverse communities showing positive and more diverse communities showing negative biodiversity changes. Finally, at the local scale, different economic and environmental indicators showed complex and divergent effects across habitat clusters and biodiversity components. These effects were only partially ameliorated within a newly established Ecological Function Conservation Area in the mountainous central part of the island. Thus, our results depict complex effects of economic development on different biodiversity dimensions in different areas of the island with different land uses and protection regimes, and between local and regional spatial scales. Profound ecosystem damage associated with economic development was partially averted, probably due to enhanced biodiversity conservation policies and law enforcement, yet at the cost of regional-scale biotic homogenization and local-scale biodiversity loss.