As one of those involved in the development said: ''If the Chinese can sell this, what's to stop them selling the Forbidden City?'' Hongkong holding company Witon Year Investment, which owns 100 per cent of Jiu Jing Juyuan Construction Industry, did the deal with the Chinese authorities eight months ago, and will develop the site.

The first villas were built in a colonial European style, which is being preserved. However, the units, ranging in size from 2,000 to 4,000 square feet, will be re-built from the original stone, but with the latest technology.

Unsteady foundations and unsightly additions made rebuilding, rather than renovation, necessary.

California-based architect Mr Piero Patri, renowned for his sympathetic refurbishments of the Ritz Carlton and Humboldt buildings in San Francisco, is masterminding the modernisation task.

A top-level group of senior Communist Party-approved architects, headed by Professor Xiang Ming, Architectural Design Master of China at Beijing Institute of Architectural Design and Research, held a weekend working party with Mr Patri to discuss his plans.

''Understand the significance - this area is the Aspen of China,'' said Mr Patri, who is chairman of architects and interior designers Whisler-Patri.

''The Beijing experts had a great desire to make the whole project work, and understood we would have to include some modern features if it was to appeal to outside buyers,'' said Mr Patri.

They helped liaise with local authorities to build a new section of road to give better access.

''They understood our desire to preserve the character of the villas, but also the need to upgrade to 21st century standards,'' added Mr Patri.

He will replace the existing corrugated iron roofing with local tiles, and import the latest high-quality materials.

Buyers will find the most up-to-date plumbing, electrical system, air-conditioning and de-humidifying equipment installed. But, apart from traditional fireplaces and plain walls, the new owners can choose their own finishing touches.

Agent Vigers Hongkong plans to market the 21 villas throughout Asia and the west coast of the US.

''We see the market as being elderly Chinese, probably in Taiwan or America,'' said Mr Tom Timmons, Vigers investment adviser.

''The units will be modernised and delivered to the buyer on a turn-key basis,'' he explained, adding that Hongkong lawyers Deacons were currently researching the title rights to ensure no nasty surprises.

As is normal in China, buyers acquire a 50-year right to use of their villa, since China retains ownership of the land.

Sale will be by tender, with the minimum bid price ranging from US$750,000 to $1.5 million.

''We don't really know the market value, so the sealed-bid tender will allow the buyers to keep their offers confidential,'' added Mr Timmons.

He anticipated interest from ''high network individuals'' and companies anxious to acquire an important piece of Chinese history.

''Lushan is one of the four great mountains of China,'' explained Mr Nelson Wong, senior manager in Vigers' commercial department.

''The villas were built over 100 years ago but, during the 1930s and 1940s and right through until the 1970s, this place was used for important meetings by the Nationalist and Communist leaders,'' explained Mr Wong.

After the revolution, Chiang Kai-shek's villa was taken over by leading party cadres.

Mao Zedong, Mei Lu, Zhou Enlai and other communist leaders maintained summer residences there and some still did, said Mr Wong.

Major events were planned and implemented at Lushan, from the thinking that spawned the cultural revolution to the final actions against the ''Gang of Four''.

Lushan's importance declined in the 1980s, said Mr Wong, when the Communist leaders changed their summer residence to Bai Dai He, near Beijing.

''But this place is truly a political mountain, and this current development is the only expansion the Chinese will allow. This is like Crown land,'' said Mr Wong.