I am 100 percent sure this is Shangri-La,' said Xuan Ke, thumping his desk with conviction. 'There is no doubt. I have all the documents.'

Well, that was easy. I had come to Lijiang in China's southwest province of Yunnan in search of paradise, and, according to this local scholar, I had found it. But my first few impressions weren't so convincing. This remote hill town looks like any other provincial Chinese city, teetering between a tired old past and an ugly, modern future. Farm equipment shops rub shoulders with the glass and steel of China's emerging wealth in 'new town'-Lijiang's bustling modern quarters. For every Mitsubishi Pajero cruising along the widened new boulevards, there are dozens of smoke-belching tractors hauling gravel down congested back streets. If this is Shangri-La, the mythical utopia chronicled in James Hilton's 1933 classic, Lost Horizon, then I'm a bit late.

Yet Dr. Xuan Ke, an authority on the history and culture of northern Yunnan, is convinced he has pinpointed the inspiration for Shangri-La. 'When I first read Lost Horizon, I was amazed,' he says, sitting in his low-ceilinged office, an unlit cigarette dangling from his fingers. 'It was very similar to Lijiang-very similar to Joseph Rock's writings.'

Rock, an Austrian-American naturalist and explorer, lived near Lijiang from 1922 to 1949 and wrote extensively on local history, culture and flora. His vivid accounts and photographs in National Geographic in the '20s and '30s introduced the outside world-and likely Hilton, Xuan theorizes-to his vision of Shangri-La. He finds many parallels between the mythic Eden and the hills of northwest Yunnan.

The literary Shangri-La is dominated by Mount Karakal, 'an almost perfect cone of snow, simple in outline as if a child had drawn it,' wrote Hilton. According to Xuan, Hilton based his descriptions on the local Karakal lookalike, the pyramid-shaped Mount Jambeyang. Rock photographed it extensively in 1928, five years before the book was published.

'The geography and background point to Lijiang,' Xuan insists-and also to the Naxi, Lijiang's dominant ethnic group. Descended from Tibetan nomads, the Naxi have since been absorbed into Yunnan's cultural fabric-which includes more than 20 other minorities, from Mongols and Tibetans to Yao and Bai Dai. Xuan is Naxi and looks it, with his shock of dark hair and strong Tibetan features. Pacing his office in loose denims and a Starsky and Hutch sweater, he rails against local officials who claim their towns to be the 'real' Shangri-La in an effort to boost tourism. 'Their idea of paradise is five-star hotels,' he complains. 'But that is not what Shangri-La is about.'