For decades, this town's name has evoked an earthly idyll, where wisdom, love, and peace reigned in a hidden mountain valley.
Talk about paradise lost; Shangri-La is getting a beltway.
Struggling to cope with over 2 million visitors a year, the town that claims to have inspired mythical accounts of heaven on earth is in danger of becoming a high-altitude hell, choked by tour buses and overwhelmed by outsiders. Even the man who claims to have first sown the seed of an idea that led to the town changing its name five years ago says he rues the day he voiced it.
"I remember it as a heavenly place," Tibetan musical entrepreneur and local cultural icon Xuan Ke says of his birthplace. Living simply beneath the eternally snowy peaks of jagged mountains, "the people were very honest, kind-hearted, and rustic," he says. "Now they have completely changed. The original spirit has disappeared."
In the 1933 bestseller "Lost Horizon," by James Hilton, Shangri-La is a secret and idyllic spot near the Himalayas. Many regions have claimed to be the inspiration for the imagined abode of the blessed, but China's government officially endorsed the town then known as Zhongdian, in Yunnan Province, in 2001.
Ever since, the authorities in this town on the eastern edge of the Tibetan plateau "have tried to build Shangri-La's tourist brand," explains Ren Jianhua, deputy director of the region's tourism office. "We want to present it to the whole world."
Within five years, Mr. Ren expects 5 million visitors to Shangri-La and its surrounding mountains annually, many brought here on direct flights from Beijing and Shanghai that he says will soon begin operation. Beyond that, "we have set no limits on how many tourists come here," he adds. "The more the better."
That approach has transformed a small village of wooden homes tucked along muddy lanes into a town covering 12 square miles and boasting more than 100 hotels. The so-called "old town" is not old at all: only one house has not been completely torn down and rebuilt in the past few years, residents say.
The new buildings are in the Tibetan style, made of wood, with imposing tree-trunk pillars supporting balconies and overhanging eaves. They are not homes, though, but shops selling jewelry, combed yak tails, yak bone combs, leather bags, and woven textiles. Over this emasculated replica of the yak-herders' village towers a 60-foot-high golden prayer wheel, a monument to kitsch.
"I was not very impressed by the old town of Shangri-La, because the Tibetan characteristics were not very obvious," says Zhang Weiming, a tourist from Kunming, the regional capital. Udo Schenk, from Germany, is blunter. "This is not heaven on earth," he scoffs. "This is a tourist trap."
That is not necessarily a bad thing for locals. "Tourism is very good; ordinary people's lives have improved a lot," says Abu Wandui, who lives in Shangri-La's only old house and who collects money from visitors "to pay for incense" at the Ming Dynasty Buddhist shrine in his living room. He sniffs at any offering under $10.
But most of the hotels, the travel agents, the bus companies, and even many of the shops are owned not by Tibetans but by Han Chinese businessmen, residents say.
"I'd say that 65 percent of the profits go to outside businessmen, 10 percent to the government, 20 percent to local businessmen, and less than 10 percent to local villagers," says Zhaxi Duoji, a local hotelier and environmental activist who has plowed profits from his guide business into a charity helping Tibetan children.
And the development of tourism masks other problems, Mr. Zhaxi says. "The authorities pay attention only to the decoration of the town," he charges. "Basic requirements are unmet. Waste water goes straight into the river. And for the restoration of the old city a lot of trees were cut down" in a nearby village where commercial logging is illegal.
"The main purpose is profit," Zhaxi adds, "so they develop tourism blindly, ignoring changes to the environment." At the same time, he worries, "Tibetan culture's capacity to absorb mass tourism is very low."
That is the challenge that faces Zhang Wenqiong, who manages Xintuo, a "green tourism" agency in Lijiang, four hours' drive into the valley.
Ms. Zhang runs small eco-tours to the villages and pastures inhabited by her fellow Naxi minority herders. Her clients explore the mountains on foot or on horseback, staying in local homes and supporting the local economy in an environmentally friendly fashion.
This is not yet the Chinese way. "Ninety-eight percent of my customers are foreigners," says Zhang. "Most Chinese like to be in big groups, going by bus to scenic spots.
"Chinese tourists tend not to be interested in how local minorities live, or in their cultures," she adds. "They just like to take pictures of nice views."
There are plenty of those in this mountainous region where three of Asia's great rivers – the Yangtze, the Irawaddy, and the Mekong – run through spectacular gorges.
But "mass tourism is putting enormous pressure" on the region, says Zhang, who says she constantly must seek out more remote destinations to satisfy clients drawn here by its reputation as one of the last wild places on earth.
"When Chinese tourists, and even some farmers here, see me picking up plastic bags left on the ground, they ask me why I bother," she laughs. "Perhaps when our company is stronger, we can fund projects to educate people about the environment."