Walk through Jinghong, the capital of Xishuangbanna prefecture, in the middle of April and you're likely to get wet - very wet. The culmination of the three-day water-splashing festival that marks the Dai New Year is a good-natured riot that involves people racing around the streets of Jinghong soaking everyone in sight with buckets of water, hoses, water pistols and water-filled balloons. But there's far more to Xishuangbanna - which lies in the deep south of Yunnan province close to the borders with Laos and Myanmar - than just the chance for a free shower. Blessed with year-round sunshine, pollution-free blue skies, palm trees, nature reserves and rainforests, Banna, as the locals call it, is the closest thing to a tropical paradise on the mainland. Add the presence of at least 13 ethnic minorities, many of whom live in the nearby mountains, which are made for trekking, and a hugely laid-back atmosphere, and it's easy to understand the appeal of this slice of Southeast Asia in China. Yet the autonomous region still lags behind Yunnan hot spots such as Lijiang, Dali and Shangri-La when it comes to attracting visitors. That's set to change. Xishuangbanna is on the cusp of a tourism boom that seems certain to transform it into a premier winter holiday destination. At the same time, Beijing is stepping up co-operation with its neighbours, and there are ambitious plans to turn Jinghong into China's gateway to Southeast Asia. So far, Yunnan's government has allocated 700 billion yuan (HK$830 billion) to boost infrastructure and tourism in the prefecture. Jinghong's low-rise skyline is now dominated by cranes, as new hotels and apartment blocks go up. A 3.5-kilometre boardwalk is being constructed along the banks of the Lancang River - the Chinese name for the Mekong, which runs through the city - complete with shopping malls and a performance square. Just outside Jinghong, which is still largely surrounded by paddy fields and rubber plantations, a 15 billion yuan tourism complex, including five-star hotels, golf courses and a theme park, is set to be open by 2013. 'Some people are already saying Jinghong is going to be the Florida of China,' says Orchid Zhang, who has run the busy Mei Mei Cafe since 2000. 'Lots of rich Chinese from the east and north are buying flats and villas here. They'll come here for a couple of weeks during the winter to enjoy the warm weather, play golf and just relax. Jinghong's going to become a huge Disneyland where rich people can have fun.' Holiday homes are still a relatively new concept on the mainland, but there are now more than enough members of the urban middle class who can afford them for property prices in Jinghong to have jumped almost 400 per cent in the last five years. Flats that once went for 800 yuan per square metre now cost close to 4,000 yuan, with Jinghong's balmy, sub-tropical climate - even in January the temperature never dips below 16 degrees Celsius - the big draw. 'For older people like me, it's very nice to spend the winter in Jinghong,' says Ren Hua, 56, a retired doctor from Kunming, Yunnan's capital. She bought her flat overlooking the Lancang River because so many of her friends had done the same. 'I think it's a trend now for people from Kunming to buy in Jinghong. The air is better, there's hardly any pollution and it has great food, so it's a perfect place for a holiday home. And I've heard it will only take 21/2 hours to get there from Kunming when the new railway is completed.' Work has already started on a high-speed railway that will ultimately link Kunming to Laos, Thailand, Myanmar, Malaysia and Singapore. Beijing wants it to be open by 2015, although delays are likely, and the railway is expected to boost the number of overseas tourists in Xishuangbanna. In the past, most foreign visitors were backpackers. Now, the big Western hotel chains and boutique hoteliers are setting up shop in Jinghong in anticipation of more well-heeled customers. 'Compared with other cities in Yunnan, Jinghong doesn't have any really special hotels or guest houses to stay in. I think that's because Xishuangbanna is possibly the last undiscovered winter holiday destination on the planet, and so there's never been a need for them until now,' says Nuhi Bunyak, a Dutchman whose hotel, The Balcony, opens in August. 'That's changing; the travellers I meet can't believe they've only just discovered this place, and a lot of people are realising that Banna's on the verge of something great.' But not everyone is pleased with the direction in which the region is headed. The discontent is most obvious among the Dai, the ethnic minority who make up one-third of Xishuangbanna's population. 'There are a lot more Han Chinese moving to Jinghong now, and the local people aren't happy about it. It's more competition, so it's harder for Dai people to start businesses here, and a lot of the Han rent their houses and land from other newcomers,' says Li Juan, a Dai woman who runs the popular Mekong Cafe. Her restaurant was forced to relocate from a traditional wooden Dai house after it was demolished to make way for a hotel owned by a company from Hunan province. Li sees fundamental differences between the Dai and the Han: 'We are all Buddhists and more easygoing and concerned with quality of life. The Han are more focused on accumulating wealth, and they work hard to do that.' Other locals, while praising the way new investment has dramatically improved Jinghong's infrastructure, decry the way the Han influx is diluting Dai culture. 'Not many Dai speak our language any more,' says Yu Xianglun, 35, the owner of a jade store. 'None of the schools in Jinghong teach Dai now, so our kids can only pick up the language when they are at home. Some of the kids can understand what we are saying but can't really speak it. But now a lot of them can't even understand. It will have a big effect on our culture if no one speaks Dai or if people stop wearing our traditional clothes.' Parts of Dai culture have been co-opted for tourism purposes, none more so than the water-splashing festival, which has become hugely popular with domestic tourists. Held from April 13 to 15, it's the climax to the Dai New Year. Closely related ethnically, culturally and linguistically to the Thais, as well as to the Tai Lue people of northern Laos and eastern Myanmar, the Dai celebrate their new year at the same time as Songkran, the Thai New Year. Originally, locals visited monasteries to wash statues of Buddha. The water used would then be poured on family members as a symbolic way of washing away the past year's dirt and sorrows and to ensure good luck in the coming year. But the third day of the festival has now become a free-for-all, where water is hurled from apartment blocks and out of shops and restaurants or sprayed from passing cars at anyone in range. 'There are a lot more tourists now, so the festival has become less pure and much more commercialised,' Yu says. Perhaps the only thing that will prevent Xishuangbanna rivalling Thailand and the rest of Southeast Asia for tourist numbers is that it's not on the coast. 'It would be a lot more attractive if there were beaches and the sea, which is what most popular holiday destinations have,' Ren says. But at least the Mekong runs through Jinghong, while a planned water amusement park is an effort to compensate for the lack of a coastline. And if you're in town in mid-April, you can count on getting drenched anyway. Just remember the wetter you get, the luckier you will be.