There were many skeptical eyebrows raised in 2001 when, in a bid to boost tourism, the Chinese town of Zhongdian and the surrounding region were officially renamed Shangri-La. Whether visitors are genuinely attracted by the area's claim to be the location of James Hilton's classic 1930s novel Lost Horizons, or whether they come (as they always have done) for the spectacular mountain scenery and ethnic Tibetan culture, isn't clear. But what is indisputable is the local tourism boom, facilitated by massive infrastructure projects—from a new airport five years ago to new highways today. What will visitors who make it to this...

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