Pausing at the edge of a field filled with fern-like, green plants, Xu Zhengdong leans on a Burberry-check umbrella and describes a folk remedy for fever. The 62-year-old remembers 'the bitter grass', as they called it, from when he was a child. 'We boiled it and drank it from a cup, to bring down fever. You use about this much to make tea,' he says, extending a cupped hand as if cradling a small bird. 'A handful. It's very bitter.'

Xu, like nearly all the ethnic Tu living in south-central China's Wuling Mountains, is poor. His hair is raggedly cut; he wears black trousers rolled above his ankles, muddy dress shoes without socks and a denim jacket buttoned over his thin frame. But the simple remedy farmers in these parts have known about for centuries is poised to become a huge industry that could transform the region - and eradicate one of the world's deadliest diseases.

A cure for malaria has eluded scientists for decades. The mosquito-borne illness infects 300 million people and kills about one million, mostly children, a year, with patients suffering low blood pressure, jaundice, kidney failure, internal bleeding, shock and coma. Conventional anti-malarial drugs such as chloroquinine and sulfadoxine-pyrimethamine have become increasingly ineffective as the disease's resistance to them has grown.

A global campaign launched by the World Health Organisation in 1998 aimed to halve malaria deaths by 2010. Instead, deaths are forecast to rise by up to 120 per cent in that time. Now it seems the Wuling Mountains remedy, adapted by huge pharmaceutical companies, could save millions of lives.

But, as at least one mainland scientist has asked, how many lives could have been saved if the cure's potential had been tapped when it was researched during Mao Zedong's rule 40 years ago?

The name of the fern-like plant that Xu rolls so casually between his fingers is Artemisia annua, or qinghaosu in Putonghua. In the United States it's known as sweet wormwood or, more colloquially, sweet Annie.

When crushed it exudes a woody smell of thyme laced with the brightness of mint. Rumours had long suggested a malaria remedy existed in ancient Chinese medical texts. These were strengthened in 1973 when archaeologists opening the Mawang Dui tombs near Changsha in Hunan province found a fever-reducing prescription in a copy of Prescriptions For Fifty-two Diseases, believed to have been written between 1065 and 771 BC.

How many lives could have been saved if the cure's potential had been tapped when it was researched during Mao Zedong's rule 40 years ago?

International health authorities in the west were suspicious of a Chinese herbal cure. Now they have executed an about-face and are clamouring to use artemisia-based medicine as the first-line treatment for malaria.

Urged on by the WHO and the Global Fund for Aids, Tuberculosis and Malaria, the main international donor organisation, 40 countries have adopted artemisia-based treatments, or Artemisia Combination Therapies, known as ACTs. The fund has advised many others countries to stop buying the older drugs and switch to the new treatments. Global demand for ACTs stands at about 20 million treatments, according to the WHO; if all goes to plan, demand will surge to 220 million by the end of 2005.

In simple terms, artemisia-based therapies work because when a malaria parasite invades the body, it accumulates in red blood cells where iron is stored in the form of haemoglobin. Artemisinin, the active pharmaceutical ingredient produced by the plant, is attracted to iron, interacting with it and then disintegrating. This releases toxic by-products that kill the malaria parasite. The substance has also shown positive results in treating cancer, although studies are at an early stage.

For Holley Pharmaceuticals, the Hangzhou-based firm that owns the Wuling Mountains fields and next-door factory where the plant is processed, these are heady days. The company already produces about half of the raw pharmaceutical material used in ACTs worldwide, including in Coartem, which is made by Swiss pharmaceutical giant Novartis and is one of the most widely used.

The factory, a collection of nondescript white buildings on the outskirts of Youyang town in the heart of the mountains, employs 90 people. Sacks of dried artemisia lie in the store rooms, smelling like a cross between chamomile and cannabis. It takes 150 kilograms of dried leaves to produce 1.5kg of artemisinin in sufficient concentrations to be used in medicine.

Holley produces about 12 tonnes of the powder a year at its Youyang factory. The plant is also grown in Vietnam and India, and trial projects are underway in Kenya. According to Holley, the highest yield of artemisinin is obtained from the Wuling Mountains site; Chinese medical authorities say the best yields come from the region.

But Holley executives have bigger plans than to remain the world's key source of the raw material. They are hoping the surge in global demand will propel the company into the ranks of the world's pharmaceutical heavyweights, making it the first Chinese drug company on the international scene.

'We want the whole world to appreciate Chinese inventions,' says Holley board chairman Wang Cheng. 'China opened its door 20 years ago but most Chinese companies haven't internationalised. We have a good opportunity with artemisinin, which will be our pioneer with which to enter the international economy and international society.'

China opened its door 20 years ago but most Chinese companies haven't internationalised

Wang's cards are good - if he can process enough of the plant to meet surging demand. Donor and research organisations are no longer in doubt that artemisinin-based drugs are the way forward, prompted in part by a toughly worded article by malaria experts in January in the British medical journal The Lancet, which accused the WHO and the Global Fund of 'medical malpractice' for continuing to pay for chloroquinine and sulfadoxine-pyrimethamine when they aren't working.

Medicines for Malaria Venture (MMV), a Geneva-based not-for-profit group coordinating research on treatment, is working on six artemisinin-based drugs. 'In medical terms everyone feels this class of drug is the answer,' says Dr Chris Hentschel, chief executive officer of MMV. The issue is, says Hentschel, can the plant be produced in sufficient quantities?

Dr Nelson Tan, medical projects director at Chongqing Holley Holding, the Chongqing-based subsidiary managing the Wuling Mountains site, is in no doubt the company can meet demand. 'We have the land and we have the seed banks,' Tan says.

But there is a problem: the WHO wants to see increased production, while Holley wants firm orders from drugs companies. Despite the foot-dragging internationally, the company has said it will take the risk and increase production. 'It's a matter of which comes first, the chicken or the egg - we need an indication [of demand from donor organisations] before February [when the planting season begins],' says Tan.

Artemisia annua, an annual plant, is harvested in August, reaching about two metres in height in just six months. 'We need purchasing orders, but if we don't get the orders we will go ahead anyway.' Holley is poised to plant up to 27,000 hectares of land in the area, which would provide more than enough for the 220 million treatments experts say will be needed.

As always, money is short. Currently, the Global Fund allocates from US$100 million to $200 million a year to fight malaria. Allan Schapira, coordinator of Roll Back Malaria, the WHO campaign set up to halve malarial deaths, says the campaign needs close to $1 billion. Complicating matters, ACTs are more expensive than conventional treatments. They sell at $6 in the private market, but Novartis has agreed to sell to donor organisations for $2.40 - still high compared to 20 cents for older treatments.

Wang says Holley would like to sell a finished product for 90 cents 'but right now that's not possible'. He points out that the price increases as the product moves along the distribution chain: one reason Holley wants to market its own drug.

Holley signed an international agreement in March to bring a Chinese-made anti-malarial drug, Artekin, into clinics around the world. If it succeeds, Artekin will join Artesunate, produced by Sanofi, and Novartis' Coartem as the main anti-malarials. But first the drug, developed by Dr Li Guoqiang at the Guangzhou University of Traditional Chinese Medicine, must undergo a stringent approval process by WHO that could take years.

'The problem is the information and documentation on Artekin is still not adequate to satisfy WHO's requirements to recommend it,' says Schapira. 'It is a very promising product but the way the data have been compiled in China goes back decades and doesn't comply with WHO standards. We need to be very careful before we stick our necks out and recommend a treatment.'

For scientist Tu Youyou, the slow pace of change is frustrating.

Sitting on a brown couch in her office at the Institute of Materia Medica, part of the Chinese Academy of Traditional Medicine in Beijing, Tu picks up a string-bound, 102-page dossier. 'April 1969' and 'Secret internal document' are written in square Chinese characters on the cover. Tu was part of a military research project ordered by Mao in the late 1960s to find a malaria cure.

The project involved 600 Chinese scientists and was launched after a plea by Vietnamese Communist leader Ho Chi Minh, himself a malaria sufferer who, at the height of the Vietnam war, was losing more fighters to the disease than to the Americans.

In 1967 Mao, keen to support Vietnam in its conflict with the United States, commissioned his premier, Zhou Enlai, to set up Project 523, named after the month and date of its inception: May 23.

Chinese medicine has a history that's more than 5,000 years old. I felt there must be something in there

For Tu, Project 523 was a relief from the superstition and hysteria of the Cultural Revolution raging all around her. 'Until then it had been things like, 'Use Mao Zedong Thought To Fight Malaria',' Tu, 73, recalls. 'They had been trying to find a cure since 1964 but those times were so confused.'

Tu began searching ancient Chinese medical texts for clues immediately after joining the project. Ho Chi Minh's plea for help had galvanised Chinese researchers. 'We really wanted to support the fight against America in Vietnam,' she says. 'Chinese medicine has a history that's more than 5,000 years old. I felt there must be something in there. I found more than 2,000 recipes that could be relevant and settled on 640 possibilities.'

A personable woman with two daughters who live abroad, Tu says the scale of the job was overwhelming and took its toll on her family. 'We worked so hard. Weekends too,' she says. 'I didn't get round to having children until I was 35, and then I wasn't around very much. They have opinions about that now.'

The petite, stocky, bespectacled woman flips through the pages to reach about mid-way through the book, where she points to a recipe on the right-hand side of the page. There, heavily underlined and annotated by hand, stands the word qinghaosu, the Chinese word for Artemisia annua. 'I sent this to all the institutes and also to the military science research institute, because this was a military project. I also investigated about 380 of the most likely ones.'

The work was constantly being interrupted by political campaigns. A native of Ningbo in Zhejiang province, Tu had relatives in Hong Kong and Taiwan. She was regarded suspiciously by the communists. Twice she was torn away from her research and sent to poor parts of the country to learn from the farmers. Both times she was able to travel to malaria-infested regions in the south where she continued to work.

'By October 1972 infected mice were being cured in laboratory experiments. People were also testing on monkeys. So on March 8, 1972, I presented a report to a national Project 523 meeting in Nanjing where I told them I thought qinghaosu was the substance we were looking for.'

It wasn't the breakthrough Tu had hoped for. The political turmoil of the era was too great and the project too badly organised. 'Project 523 was both a good and a bad thing,' she explains. 'They held so many meetings and there were so many competing centres, it was a real mess. Nearly every province had their own research centre and they all asked me to share my research. Which I did. But that's no way to do science. They wasted a lot of money and a lot of time.'

The research group was disbanded in the late 1970s. 'They didn't need it because the Cultural Revolution was over,' says Tu. Research shifted to civilian institutions, overseen by the Chinese Coordinating Research Group.

Clinical trials began in 1979, when 2,099 people were treated; the Chinese Coordinating Research Group reported a total cure. In experiments since then, cure rates of 90 per cent have been common, including in people with chloroquinine-resistant malaria. In 1981, belatedly, Tu was awarded 200 yuan and a plaque in honour of her work. In 1982, Chinese scientists met WHO officials in Beijing and told them they had found a cure for malaria. According to Tu, the WHO was interested but didn't take the matter further.

We gave the WHO the information in 1982 - why didn't they use it then? Why did they let so many people die?

More than 20 years later the situation has changed: the whole world wants to know about qinghaosu. But for Tu, it's too late.

'I didn't do this for myself,' she says. 'Every scientist dreams of doing something that can help the world. There are so many children dying every year. Malaria is spreading. We gave the WHO the information in 1982 - why didn't they use it then? Why did they let so many people die? Between 3,000 and 4,000 children die of it every day. It's so sad. They should have started using qinghaosu much earlier.'

She disagrees that the relatively higher cost of ACTs are a barrier to solving the problem.

'Malaria is a poor person's disease. But it's not a question of cost, it's a question of whether the drugs work or not. If they [the quinines] don't work then there's no point using them. Do people want to solve the malaria problem or not?'