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The locals of Hama village know what to do with a fat, smelly truffle. For centuries, if the village pigs in this remote corner of China's Yunnan province were acting a little less amorous than normal, the farmers fed a shovelful of truffles to the creatures in order to guarantee a future litter of piglets. Then, a few years ago, a strange tale wended its way through this hamlet so disconnected from modern China that Cultural Revolution slogans from three decades ago are still inscribed on the village's mud-brick walls: foreigners, for some mysterious reason, were willing to pay exorbitant prices for what the locals dismissively call pig-snout fungus. "When we first asked the people in the countryside whether they had any truffles, they were shocked we wanted to buy them," recalls Wu Jianming, chairman of Kunming Rare Truffle Co, the province's largest truffle exporter. "An hour later, they brought us a whole bagful and still couldn't believe that foreigners wanted to eat what they usually fed to their pigs."

China is the world's biggest exporter of fake goods, from pirated DVDs to knockoff Birkin bags. Now add truffles to the list. To the naked eye, the Chinese black truffle, or Tuber indicum, looks virtually indistinguishable from its much-vaunted cousin, Tuber melanosporum, or the Périgord truffle, a gastronomic delicacy that perks up winter menus with its earthy pungency. One taste, though, clears up any confusion: the Chinese variety is insipid compared with the French one. Yet over the past few years, unscrupulous dealers in Europe and the U.S. have begun passing off the Chinese truffles as Périgord's black diamonds. The deception has roiled the luxury-food industry, particularly as European harvests have dwindled. Last season, when a heat wave cut the Périgord bounty from the usual 50 tons to 9 tons, the import of Chinese truffles skyrocketed to an estimated 30 tons from 20 tons the year before. This season, the U.S. is facing its own Chinese truffle deluge; a strong euro has sent the price of French truffle imports up 30% in the past year, leading some restaurants and gourmet-store owners to substitute Eastern truffles for Périgords. Purists are outraged. "You can't compare the two," sniffs Guy Monier, who sells French truffles for $2,300 a kilo at his Paris shop but has seen the Chinese fungus masquerading as the French variety in nearby supermarkets. "The Chinese import is just a flavorless, rubbery black ball."

Kunming Rare Truffle Co.'s Wu cheerfully admits that some of his European and American clients mix his fungi with French ones. But the former metallurgist is astounded less by the chicanery than by the prices his truffles can command abroad. What Wu sells to wholesalers for $80 a kilo can be resold to Westerners for 30 times that, or more than double the average yearly income in China. "Who would pay that much for a mushroom," Wu marvels. "Is it because they think it's an aphrodisiac?" (Since medieval times, many have believed just that.) Nevertheless, Wu does maintain a modicum of pride about the 40-50 tons of truffles that his team of 20,000 gatherers harvests for him each year. "They taste just as good as the French ones, with maybe a little less aroma," he contends—although he concedes that he's never actually tasted a Périgord truffle.

Don't tell that to Guy Cubaynes, a truffle harvester from the southern French town of Lalbenque, who is taking his 250-kg pig named Kiki for her first truffle hunt of the season. Cubaynes' family has been gathering truffles since the 1850s, searching for the fungi under the shade of oak trees. He says dealers in Chinese truffles have even infiltrated the center of French truffle production. Every week, Cubaynes claims, these merchants show up at the market in Lalbenque with the same number of truffles in their baskets, a suspicious constancy that normal truffle collecting does not tend to provide. "It's cheating the consumer," says Cubaynes, "and it's also cheating the honest worker."

France is now counting on modern science to catch the truffle imposters. The National Institute of Agricultural Research (INRA) has developed a DNA analysis to distinguish French fungi from the Chinese ones without a taste test. Although French regulations call for a truffle's origins to be clearly marked, truffle experts say many vendors either ignore the rules or engage in outright mislabeling. France's fraud-control directorate now carries out random DNA testing to flush out bogus-truffle dealers. Anyone caught intending to deceive the consumer with a Chinese truffle may be fined $1,300. Still, there are few inspectors and many truffles. "If the consumer is properly informed that they are eating a Chinese truffle, there is no problem," says Michel Courvoisier, director of the French Federation of Truffle Growers. "But when a shop or restaurateur uses one in the place of the other, the consumer is ripped off. I suspect this happens a lot."

There's more to worry the French. "We saw in experiments that Tuber indicum is very dominant, competitive and aggressive," frets Gerard Chevalier, a researcher at INRA. He paints a scenario in which errant spores from imported Chinese truffles disperse into the air, contaminate the French countryside and do ecological battle with their more fragile cousin. Already, the ancient truffle terroir is being hammered by pesticides and urbanization. Two centuries ago, French black truffles were so abundant that they were cheaper than tomatoes; yet since then, the average annual harvest in the Périgord region and beyond has declined from some 1,800 tons to 50 tons. An influx of Chinese truffle spores could finish off an already threatened gastronomic tradition.

Back in China, though, Wu sees nothing but mycological possibility. In the past year, he has begun exporting his own truffle oil and is starting a canned foie gras business using geese imported from Hungary. Now, he's attempting to duplicate the soil and precipitation conditions of southern France in his Yunnan fields. Just like France's INRA, Wu has done his own truffle-DNA testing, and he is determined to reverse-engineer an Eastern facsimile of a Périgord. If he can create the correct environmental conditions, Wu believes Yunnan's plentiful land and low fixed costs will make him even more of a threat to the French truffle tradition. "Labor is very cheap here," Wu says. "In France they use pigs and dogs to find truffles. We can use humans."

None of that, though, changes one irksome fact that has limited Wu's business. For all their gastronomic enthusiasm for endangered sea animals or all matter of rare mammalian life, the Chinese so far appear immune to the pleasures of a black truffle. Mushroom gatherer Li Kun shakes his head when asked whether he enjoys the flavor of the black nuggets he's scooping up from the loamy soil near Hama. "When we're really hungry, we eat them covered with soy sauce, coriander, chili paste and MSG," he says. "That way you don't have to taste the truffle too much, only the sauce." Sacrilege.

• Hannah Beech | Hama
• Chinese "pig-snout" fungi are flooding gourmet-food markets, and the French are not amused