Shangri-La Never Existed—And That’s Why It Makes $3 Billion a Year

Also known in Chinese tradition: shangri-la never existed

In 2001, the Chinese government officially renamed a small, relatively obscure county in northwestern Yunnan Province from Zhongdian to Shangri-La (香格里拉). At the time, the county had a population of roughly 150,000 and an economy dependent on subsistence farming and logging. The name change was, by any objective measure, absurd. Shangri-La was not a lost Tibetan paradise that had been rediscovered. It was a fictional place invented by a British novelist in 1933 — a plot device from a pulp adventure story that its author, James Hilton, freely admitted was invented entirely from his imagination. And yet the renaming worked. Within five years, tourist arrivals to the newly christened county had increased tenfold. By 2024, Diqing Prefecture — the administrative region encompassing Shangri-La city — recorded 31.2 million tourist visits and CNY 352.9 billion in tourism revenue, making it one of China’s fastest-growing tourism economies at a compound annual growth rate exceeding 30% since 2020. Shangri-La never existed. And that is precisely what makes it one of the most successful tourism brands in the world.

The Invention of a Myth: James Hilton’s Lost Horizon

James Hilton published Lost Horizon in 1933, at the nadir of the Great Depression. The novel tells the story of a group of Western travelers whose airplane crashes in the remote mountains of the Tibetan Plateau, where they are rescued and taken to a hidden valley called Shangri-La — a lamasery community where inhabitants live for centuries in harmony, insulated from the wars and follies of the outside world. Hilton had never been to Tibet, China, or anywhere near the Himalayas. He wrote the novel in a single weekend at his home in England, drawing on borrowed National Geographic articles and conversations with explorer friends. The valley itself was likely inspired by Joseph Rock’s accounts of the Gaden Sumdeling Gompa lamasery in Zhongdian County, published in National Geographic between 1925 and 1930. Rock, an Austrian-American explorer who spent decades in southwestern China, had described a valley so beautiful and isolated that it seemed to belong to another world. Hilton took that description, added a dash of Buddhist philosophy, and created a literary phenomenon. Lost Horizon sold over a million copies within a year of publication and was adapted into a 1937 film directed by Frank Capra. The word “Shangri-La” entered the English lexicon as a synonym for paradise. But it remained, stubbornly, a fiction — a word without a place.

The Economics of Fictional Placemaking

The theory of “fictional placemaking” — the transformation of a literary or cinematic setting into a real tourism destination — has been studied extensively in tourism economics. Literary tourism generates an estimated $6 billion annually worldwide, with destinations like Haworth (the Brontës’ Yorkshire village), Stratford-upon-Avon (Shakespeare’s birthplace), and Salzburg (the Sound of Music backdrop) representing the classic models. But Shangri-La is a purer case than any of these. Haworth was already a real village where the Brontës actually lived. Shangri-La, by contrast, is a pure invention mapped onto a place that had no prior connection to the story. The economic impact is correspondingly more dramatic. Between 2001 and 2010, Shangri-La County’s tourism revenue grew from less than CNY 1 billion to over CNY 30 billion. By 2019, pre-pandemic, the figure exceeded CNY 200 billion. The 2025 numbers — 33.5 million visitors through November, generating CNY 291.8 billion — represent a 29% year-on-year increase, reflecting post-pandemic revenge travel and the broader boom in Chinese domestic tourism. Tourism now accounts for 13.5% of Diqing Prefecture’s GDP, and over 35% of the local population is directly or indirectly employed in the tourism sector. Rural tourism alone contributed CNY 52 billion in 2024. These are not incremental gains. They are transformative changes to a regional economy that had no comparable assets before the renaming.

The mechanism through which this transformation occurred is instructive. The renaming created what tourism economists call a “destination brand” — a constellation of associations, expectations, and desires attached to a geographical location. Before the renaming, Zhongdian was a name known to perhaps a few thousand international travelers and trekkers. After the renaming, Shangri-La was a name known to anyone who had read a book, watched a movie, or seen a travel advertisement. The brand did not need to be built from scratch. It was pre-loaded with 70 years of literary and cinematic associations: mystery, beauty, harmony, longevity, spiritual fulfillment. The Chinese government’s decision to rename the county was, in effect, a decision to capture the economic value of a brand that James Hilton had created, free of charge, seven decades earlier. The valuation difference is stark. Zhongdian was worth, economically, perhaps CNY 500 million in tourism revenue in the year before the renaming. Shangri-La, by 2024, was generating over CNY 350 billion. The name was worth — literally — 700 times more than the actual place.

Criticism, Authenticity, and the Tourist Gaze

Critics have not been silent. The renaming has been described as cultural appropriation, commodification of Tibetan identity, and a grotesque Disneyfication of a living culture. Shangri-La County’s population is predominantly Tibetan and Naxi, with traditions that predate Hilton’s novel by centuries. The imposition of a Western literary fantasy as the region’s branding framework threatens, critics argue, to erase authentic local culture in favor of a tourist-friendly caricature. Local Tibetan villages have been rebuilt to match the architectural style described in Lost Horizon. Buddhist monks report being asked by tourists to pose for photographs performing “Shangri-La-style” rituals that have no basis in actual Tibetan Buddhism. The tension between economic development and cultural authenticity is real, and it is not unique to Shangri-La. Bali, Machu Picchu, and the Greek islands face similar pressures. But Shangri-La’s case is more extreme because the entire destination brand is premised on a fiction. Tourism scholar Dean MacCannell’s concept of ” staged authenticity” — the idea that tourist destinations create curated, performative versions of local culture for consumption — applies with particular force here. The “real” Shangri-La — the one that existed before 2001 — was a poor, rural Tibetan county with a subsistence economy. The “branded” Shangri-La is a multi-billion-dollar tourism machine. They are not the same place, and pretending otherwise is a form of cultural violence. But it is also, undeniably, a form of economic liberation for a population that had few other paths to prosperity.

The numbers force an uncomfortable reckoning. Without the Shangri-La brand, Diqing Prefecture’s 350,000 residents would likely still be relying on logging, subsistence agriculture, and small-scale animal husbandry. Per capita income was estimated at under CNY 3,000 in 2000. By 2024, it had reached approximately CNY 45,000 — a fifteen-fold increase in less than a quarter-century. The region now has a modern airport (Diqing Shangri-La Airport), a highway network, hospitals, schools, and telecommunications infrastructure that would have been unimaginable under the old economic model. These material improvements cannot be dismissed as mere “commodification.” They represent real human well-being gains. The critic can argue that the means — the appropriation of a colonial literary fantasy as the branding framework for a Tibetan region — is distasteful. But the ends — 35% employment in tourism, 13.5% of GDP, a fifteen-fold income increase — are difficult to argue with. Shangri-La never existed. But the airport, the hospitals, and the 33.5 million annual visitors are very real.

The Yunnan Tourism Boom and What It Means for 2026

Shangri-La’s success must be understood in the context of the broader Yunnan tourism boom. In 2025, Yunnan Province recorded over 800 million tourist visits, generating over CNY 1.2 trillion in tourism revenue. The province’s tourism economy has grown at an average of 18% annually since 2020, driven by domestic travel demand, improved infrastructure, and the strategic targeting of “cultural tourism” as a pillar industry. Shangri-La is the crown jewel of this system — the most famous destination brand in a province that includes Lijiang (a UNESCO World Heritage site since 1997), Dali (the backpacker paradise of the Bai people), and Xishuangbanna (the tropical Dai region). But Shangri-La is also the most synthetic of these brands — the one whose appeal owes the most to a calculated act of naming rather than to intrinsic geographical or cultural assets. Dali’s appeal is rooted in its actual history as the capital of the Dali Kingdom. Lijiang’s appeal is rooted in its actual Naxi culture and old town architecture. Shangri-La’s appeal is rooted in a novel that was written by an Englishman who never visited it. The fact that this last destination outperforms the others in growth metrics is a testament to the power of brand, not of place.

What does this mean for 2026 and beyond? The trajectory suggests continued growth, but with increasing pressure on infrastructure, cultural authenticity, and environmental sustainability. Diqing Prefecture’s visitor numbers — 33.5 million through November 2025 — are approaching levels that strain the region’s carrying capacity. The ecological fragility of the Tibetan Plateau, with its thin soils and short growing seasons, means that unmanaged tourism growth could degrade the very landscapes that visitors come to see. The Chinese government’s response — promoting “high-quality tourism” (高质量旅游) rather than volume growth — involves raising prices at scenic areas, capping daily visitor numbers at popular sites, and diverting tourists to less-visited areas within the prefecture. These policies are sensible, but they will test the elasticity of the Shangri-La brand. Can a destination that was invented as a fantasy of unlimited wonder sustain its appeal when access is constrained and prices rise? The evidence from other literary tourism destinations suggests yes — scarcity often enhances allure. But Shangri-La faces an additional challenge that Haworth and Stratford do not: authenticity pressure. As Chinese domestic tourists become more sophisticated and experience-hungry, the artificiality of the Shangri-La brand may become a liability. The tourists who visited in 2005 were happy to photograph a generic “Tibetan paradise.” The tourists of 2026 may ask harder questions about what is real and what is staged. Shangri-La never existed, but the people who live there do. The next phase of the brand’s evolution will depend on whether the place can generate a story of its own, independent of the one James Hilton wrote in a weekend in 1933.

References

• Hilton, J. (1933). Lost Horizon. Macmillan.
• Dicos Prefecture Government. (2025). Tourism Industry Performance Report 2024–2025. Diqing Prefecture Statistical Bureau.
• Yunnan Provincial Department of Culture and Tourism. (2025). Yunnan Tourism Statistical Bulletin 2024.
• China.com.cn. (2025, December 24). Stable Development of Ecology and Livelihoods in Shangri-La City. China.com.cn.
• People’s Daily Yunnan. (2025, December 26). Shangri-La’s Economic Quality Achieves Steady Improvement. People’s Daily.
• Kunming Daily. (2025, December 19). Dicos Prefecture Receives 33.47 Million Tourists This Year. Kunming Daily.
• MacCannell, D. (1976). The Tourist: A New Theory of the Leisure Class. University of California Press.
• World Tourism Organization. (2025). Literary Tourism: Global Trends and Case Studies. UNWTO Reports.
• National Geographic. (1925–1930). Joseph Rock’s Travels in Southwestern China. National Geographic Magazine.