Established by the Baptist University three years ago to honour distinguished Chinese-language fiction, this year's prize pays tribute to his 2005 novel Shengsi Pilao, released in English translation in May as Life and Death Are Wearing Me Out.

It is Mo's favourite among the more than 100 short stories and novels he's written.

"If I have a couple of books destined to circulate widely over time, Life and Death Are Wearing Me Out is certainly one of them," he says. "It's a mature work and fits my criteria of a good novel."

In his book, that means a work with a meaningful theme people can relate to on many levels, and a vivid examination of real life featuring some unique characters.

Life and Death explores how the mainland has been transformed during the past 50 years - from earlier co-operative and collective systems to the relatively unfettered enterprise of recent years - through the experiences of two characters living in his hometown of Gaomi. There is the wealthy landlord Ximen Nao, who is shot dead as land reforms begin but is reincarnated as a donkey, an ox, a pig, a dog, a monkey and back as a human, each giving their own perspective of events.

The other main character, a peasant named Lan Lian who works for the landlord and owns or befriends each of the reborn animals, is based on a proud villager Mo knew as a child.

"I was in primary school by then. Lan Lian always passed by with his donkey cart during class breaks. He was the only farmer who refused to join the commune. We kids thought he was a stubborn old monster, and used to throw stones at him and make fun of him."

(During the Great Leap Forward, which aimed to turn largely agrarian China into an industrialised economy, peasant households were pressed to join communes, which decided how food, animals or earnings would be distributed.)

"When I grew up and started writing, I realised how extraordinary his personality was. Especially when farmers got their agricultural land back again in the 1980s, history has proved that Lan Lian was right not to join the commune. I was sure he would be a great hero in my novel."

But unlike the fictional character, Mo says the real-life Lan Lian didn't survive the turmoil of the Cultural Revolution: he hanged himself at its start, in 1966.

"I think people like him shouldn't die. When he has sacrificed so much, he should stick it out until the very end; otherwise he would only make his attackers happy."

Much has been made about how Mo completed the 430,000-word novel in 43 days, but he says the ideas had been brewing for years.

"I saved the story until 2005 because the characters were so powerful that for a long time I wasn't confident about handling them with my writing skills and experiences."

Besides, he says, he might not have been able to get the book published 20 years ago.

Mo had holed up in a small flat on the outskirts of Beijing, without a telephone or computer, writing the entire novel by hand, which he found more efficient.

"It was a very happy writing experience. I'm familiar with every character because they have been living with me for most of my life. The whole process was like talking to some old friends."

It took the writer a while to get going. "When I started, my characters were still blurry but halfway through all of them became so clear and vivid. They had their own lives, way of thinking and style of talking," he says. "In the first half of the novel, I, as the writer, was controlling the characters, but in the second half, I was just following the steps of the characters I created."

Dreams play a major role in Mo's fiction. A Transparent Carrot, the novel which launched him on the mainland literary scene, was inspired by his dreams, as were other works.

"The characters in my novels haunt my dreams. I worked out so many details and plots of the stories while asleep. Many difficulties I encountered while writing were solved in my dreams," he says. "Dreams are a very precious resource for writers."

Critics have compared his work to the magical realism of Gabriel Garcia Marquez and the absurdist literature of Franz Kafka, and Mo acknowledges the influence of works such as The Metamorphosis. But he says all his novels integrate Chinese characteristics.

"Many classics of Chinese literature ostensibly involved ghosts, gods or animals, when in fact, they were all reflecting on people, their lives and social issues," he says. "We should be inspired by our culture and history to develop a Chinese magic realism, but not just be pathetic copycats of western masters."

Mo didn't make up his mind to adopt a magical realist style for Life and Death until he visited a famous Buddhist temple in Chengde, Hebei province. "I was fascinated by the frescos on the wall. The minute I saw the images depicting reincarnation, I knew exactly how to proceed with my story. "

Mo left school when he was 14 to work in the fields, but later enlisted in the People's Liberation Army, which enabled him to study literature in the army arts college. He later earned a master's degree at Beijing Normal University.

Renowned for his imaginative and humanistic fiction, Mo says many ideas come from his childhood spent with oxen, goats and donkeys on the family farm.

"Children my age were studying, but I had to quit school because of my family background. I preferred to stay out with animals all day rather than work around the home," Mo says. "I probably spent more time with oxen than with my family."

The life of fellow villagers was another source of ideas. "When I was a little kid, I used to hang out with neighbours every day, gossiping and talking about almost everything. At the time I never dreamed of becoming a novelist. Ironically, the gossip provided invaluable inspiration," he says.

These days, however, Gaomi county, which forms the setting for many of his novels, is unfamiliar territory. "Gaomi county now is totally different from how it was when I was young. My hometown only exists in my memories and the only way I can go there again is to write about it in my novels."

Often hailed as one of China's leading contenders for a Nobel Prize for literature, Mo couldn't care less about such honours. Indeed, he groans at the many formal gatherings that follow such recognition.

"I'm really tired of these forums and meetings that I have to go to," he says. "Real writers don't write for awards. The more you think about a prize, the further away it will be. When you forget about it, the prize might unexpectedly come to you. I think it is better if I can just forget about it."