Hi.

We're planning to cycle from Dali to Shaxi, via Yangbi.

Has anyone here cycled this way before? Would you suggest going in this direction, or would it be better to go Dali - Shaxi - Yangbi ...

Would anyone have any suggestions on bike renting places in Dali?

Thanks for the help.

I would go with your plan of Dali - Yangbi - Shaxi. That way you get the worst part of the road out of the way first. Also there is not much to say about Yangbi, as such it is a better way point than destination. Shaxi is a nice destination.
It is also a very nice ride up the valley, and the road users are more considerate on that side of the mountain.

See:

www.gokunming.com/[...]

as well.