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Three maroon-robed monks, shorn and strong, arrive to give a hand. The tourists have been trying to push the prayer wheel counterclockwise—the wrong direction in Tibetan Buddhism. The monks reverse their energy and get the wheel twirling like a gargantuan top.

Someone's cell phone trills a Chinese pop tune. A woman in lavender tights digs into her oversize purse. A man in a suit reaches into his black leather overcoat. A girl in plaid Converse high-tops rummages in her silver backpack. But it is one of the monks who steps away from the wheel and pulls the gadget from the folds of his robe.

He shouts into the phone while staring out across the city below. There is the Paradise Hotel, a five-star colossus enclosing a swimming pool and an enormous white plastic replica of sacred Mount Kawagebo. There, sprawling in all directions, are gray concrete tenements. There, against a far hillside, is the restored 17th-century Ganden Sumtseling Monastery, a smaller but no less inspiring version of the grand Potala in Tibet, gleaming in the wood-smoke haze like an imaginary palace.

Welcome to Shangri-La.

A decade ago this was an obscure, one-horse village on the edge of the Tibetan Plateau. Today, after an extreme makeover, it's one of the hottest tourist towns in China, gateway city to the Three Parallel Rivers World Heritage site in northwestern Yunnan Province.

Ten years ago the original village was becoming a ghost town of derelict buildings and deserted dirt roads. Most residents had moved out of their traditional homes—commodious chalet-like farmhouses with stone walls and magnificent wooden beams—into more modern structures with running water and septic systems. The historic quarter they left behind seemed doomed.

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