On a visit to Geneva, he said there were no talks under way between Beijing and the exiled Tibetans he leads on the future of Chinese rule in his Himalayan homeland.
The Tibetan spiritual leader said the Uighur unrest in Xinjiang province in July, in which 197 people died according to the official death toll, showed the need for the Chinese Communist Party to rethink its approach.
"The time has come," the Nobel Peace Prize winner said.
"Their policy basically failed to bring enthusiasm in the minority people," he said, citing a lack of trust and little feeling of a "concept of we" across different Chinese groups.
In Xinjiang's worst ethnic violence in decades, native Uighurs last month attacked Han Chinese in the regional capital Urumqi after police tried to break up a protest against attacks on Uighur migrant workers in south China.
Chinese authorities said most of those killed in the riots were Han Chinese, who make up the overwhelming majority of China's 1.3 billion population. Exiled Uighurs said security forces then detained thousands of Uighurs.
Millions of Han Chinese have migrated into Xinjiang during decades of Communist rule and tensions run high between them and Uighurs, a Muslim people culturally and linguistically tied to Central Asia.
Last year violent anti-Chinese protests in Tibet led to 19 deaths and, according to exiles, a subsequent crackdown by security forces killed more than 200.
The Dalai Lama has lived in India since fleeing a failed uprising against Chinese rule in 1959. China accuses him of stoking unrest among Tibetans, while he says he opposes violence and seeks religious freedom and autonomy for the region.
Speaking to reporters after a meeting with Chinese and Tibetan activists, he described a "very clear" split between hardliners and moderates among China's leaders, and said Chinese intellectuals were increasingly pressing for a new stance.
"After five years, 10 years, I think things will change," he said, adding that many Chinese leaders privately acknowledged a need "to bring a more realistic policy."
"When I look at Tibet issue locally I am hopeless," he said. "When I look at Tibet issue from wider perspective, I am very, very optimistic."
Editing by Andrew Roche