Ancient architecture in the city of Pingyao Photo: IC

Xinglongyi Inn, one of many hotels adapted from century-old buildings in the UNESCO heritage-listed city of Pingyao, North China's Shanxi Province, is rated 4.5 out of a possible 5 on Tripadvisor, the world's leading travel platform.

"From this house, my ancestors developed tea trade with businesspeople from as far as Russia during the Qing Dynasty. But locals seldom saw foreigners here in the old times. Nowadays, half of my guests are from Europe," said Zhao Xiaohong, the inn's owner.

When she inherited the house, it was a dilapidated, deserted silk shop. She restored it to keep the building's original appearance and renovated the interior to make separate hotel rooms.

"The buildings are well protected. The hostess is nice and can speak English. Best of all is the courtyard, a perfect place for tea-drinking and reading," said Bart Johannes, a hotel guest from the Netherlands.

Pingyao, the ancient walled city built into its current form in the 14th century, was named a world heritage site by UNESCO in 1997.

Contributions to banking

The city put itself on the map in the 19th century as China's financial center. Banks flourished as Shanxi merchants expanded their businesses across the country and abroad.

"In its heyday, Pingyao hosted 22 bank centers with branches set up in 69 cities and townships nationwide. They controlled nearly half of the money in the country," said Gao Chunping, a researcher with the Shanxi Academy of Social Sciences.

Gao said many have asked why the prototype of China's banking appeared in such a landlocked, remote area. But it was in fact because of its barren land that people had to reach out for business that could allow them to earn a living, such as trade and finance.

With land erosion by the banks of the Yellow River, known as the Loess Plateau, and desolate mountains, Shanxi has harsh natural conditions compared to the country's eastern plains.

Pingyao's golden days of prosperity from trade and finance did not last. In the early 20th century, banks collapsed one after another as the Qing dynasty fell and an influx of foreign banks followed. Soon, the country fell into war.

Despite twists and turns, Shanxi's financial sector has helped lay the foundation for the country's current banking system.

The province witnessed the establishment of two predecessors of China's central bank during the War of Resistance against Japanese Aggression (1931-45). With the two banks, the Communist Party of China (CPC) was able to issue currencies in the 1940s before the founding of the People's Republic of China (PRC) in 1949. The banks later merged into the People's Bank of China, China's central bank.

But it is Shanxi's rich coal resources, or "black gold," that have had a more profound impact on national development.

Rich coal resources

Since the founding of the PRC, the province has produced more than 19 billion tons of raw coal and sent it to 26 Chinese provinces, autonomous regions and municipalities to fuel local economic development.

In 2018, Shanxi's raw coal output was 893 million tons, more than 340 times the output in 1949.

However, the fast growth has left "scars." Coal mining has deteriorated vegetation coverage and was blamed for the worst smog occurrence in China. There is also an area of subsidence measuring at least 3,000 square kilometers, a result of coal mining in the province, which has triggered the disruption of underground rivers.

Shanxi was forced to change its economic development model. In 2009, the provincial government launched an energy revolution to reverse the chaos brought about by coal mining and transfer to green development.

The coal-rich province has closed 88 coal mines and reduced 88.41 million tons of overcapacity from 2016-18, leading the country in coal capacity cuts.

Poverty alleviation efforts

In 2018, the provincial government utilized 80 percent of its fiscal expenditure, more than 400 billion yuan ($56 billion), in the environmental protection, education, poverty alleviation and transportation sectors.

Wang Ping was made redundant when Shigejie Coal Mine was shut down in 2016 amid Shanxi's efforts to cut outdated coal mines.

The Lu'an Group, the owner of the coal mine, transferred her to work in a biotechnology company owned by the group.

At first, she was reluctant to go as her entire family worked in the coal mine, but soon she discovered the benefits of the new company.

"The company develops food and cosmetics with peony seed oil. I work in a packaging factory. The environment is so clean, which is in great contrast to the coal shaft, and my monthly income has increased by nearly 1,000 yuan," she said.

Feng Guobao, board chairman of Shanxi Lu'an Shigejie Zhihua Biotechnology Co, said that developing peony seed oil was originally one of the Lu'an Group's initiatives to assist in poverty relief in mountainous areas, but over time it has become the most successful program for the group's diversification of its business structure.

The company now boasts one of China's largest seed oil production capacities with a peony-planting base of 20,000 hectares (200 square kilometers).

"We have exported 1,500 kilograms of peony seed oil to South Korea this year," Feng said.

He said that in the mountainous areas, the land is poor. Peony planting is more effective than grain planting, and it also saves labor.

"The ecology here is fragile. Only ecological agriculture is environmentally friendly," he said.

Over the past 20 years, the local government and leading enterprises like Lu'an have initiated programs to help farmers find fortune in the poor, mountainous areas while restoring the ecological environment.

Instead of depending heavily on mineral resources, locals began to plant economical trees and herbs. They have restored 1.82 million hectares of reclaimed land to mountain forests, putting a "green coat" on the barren hills.

Sun Ping'er, a 59-year-old man from Mengjiaping Village of Xingxian County in the Loess Plateau, said locals traditionally lived in cave dwellings dug in loess slopes, which were humid, dark and dangerous.

"When I was young, our family of five lived in such a cave house. We only had two meals a day in winter," he said.

Two years ago, Sun and his wife joined a rural cooperative specializing in afforestation for poverty alleviation. They earned more than 50,000 yuan last year by planting high-value fruit trees, which not only lifted them out of poverty but also enabled them to enlarge and consolidate their cave dwellings with bricks and concrete.

The refurbishment has made their home spacious and safe. They spent 10,000 yuan in the process, which they could not have imagined 10 years ago.

By October, 41 counties in Shanxi had been lifted out of poverty, although the poverty-relief campaign in the province has been considered quite challenging.

"The government is helping the poor, and we should work hard to help ourselves," Sun said.