This year is the 100th anniversary of the discovery of the Mogao Grottoes in Dunhuang, Gansu province, where Marco Polo first crossed into China. The caves are famous for their murals - magnificent works of art with colourful, multicultural influences from Iran, the Middle East, Islam and Buddhism painted during a period spanning more than 1,600 years.

The anniversary is being marked in a number of interesting ways. In Hong Kong, the China Commercial Press is producing a set of 34 booklets detailing the arts and literature of the Mogao caves. Several cultural seminars will be held in Japan and Europe, with a large entourage of scholars and experts scheduled to visit the Silk Road in the summer. Professor Yu Chung-yu, founder of the Hong Kong Society of Arts and Culture, will take some 300 delegates to Dunhuang to commemorate the event, and the Po Lin monastery in Hong Kong will unveil an mural commissioned two years ago in cooperation with the Dunhuang Research Institute. The monastery complex, a spectacular Tang dynasty-style building, was actually inspired by a painting in one of the grottoes. Last but not least, a major car rally will run from Europe to Xian, stopping at Dunhuang. I have the honour of hosting this large party - about 200 cars are expected to compete - in my Silk Road Dunhuang hotel in July.

The last time I traveled on the Silk Road to Dunhuang I was accompanied by a number of famous local faces, including Victor Fung, chairman of the Hong Kong Trade Development Council, banker David Wong, Margie Yang, Alan Wong, chairman of VTech Holdings, and Victor Lo, who owns another high-tech high-flier, Gold Peak. It was a high-profile visit with an economic mission. We covered five cities and three provinces in six days - a typical Victor Fung trip, in fact! Our business leaders were impressed by the potential for, and the pace of, development along the Silk Road, which bodes well for future investment, joint ventures and trade between two very different parts of China - the northwest desert and the southern skyscraper city of Hong Kong. I believe the new millennium will usher in a new era of prosperity along the old East-West trading route. The Silk Road will rise in importance once again.

We began our eye-opening trip in Xian, Shaanxi province, the ancient Chinese capital, where we were met by TDC staff based in China. The logistics were handled by my people in the Silk Road Travel Agency. From Xian, we went west into Gansu to visit the Lanzhou trade fair. After a stop in Dunhuang, we travelled to the far north of Xinjiang province, to Urumqi, the site of another trade fair. Our final destination was Turpan. The group expressed surprise at the cosmopolitan atmosphere in Xinjiang - everywhere we went there were travellers and traders from Central Asia, eastern Europe and even western Europe. The two main industries are oil exploration and cotton growing. Xinjiang boasts the biggest oil reserve on earth, estimated at 200 billion tons, and it is the largest cotton growing area in China. Margie Yang owns a cotton weaving plant there that uses the latest Japanese technology.

They were also impressed by the burgeoning infrastructure. New highways are being built with World Bank money, including a cross-desert road between Urumqi and Kashi (Kashgar). A new railway linking the north and south of the province has just been completed. It used to take five or six hours to drive from Urumqi to Turpan; now it takes just over an hour on the new highway. This infrastructure, coupled with good air links to cities of the former eastern bloc, hastens the onset of trade and investment. The best news for Hong Kong travellers is that a direct flight between Hong Kong and Urumqi will begin operating this year. An agreement was thrashed out at a long session between Victor Fung and the chairman of the Xinjiang Autonomous Region. Dr. Fung, who is also chairman of the Airport Authority, was able to grant the necessary preferential terms. The two men also discussed the opening of a TDC office in northwest China and laid the groundwork for several trade missions this year, focusing on oil, leather, weaving and light industrial goods.

There is tremendous cross-border trade between Urumqi and the five former Soviet, now independent, states of Kazakstan, Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan. The most amazing place to see this is in an old 800-room Urumqi hotel that now functions as a marketplace. Each room is occupied by a small manufacturer or trader, whether it be for shoes, jeans or light machinery. Next door, the authorities have opened a customs office and next to that is a trucking firm, so the goods can be moved easily over the border once a deal has been struck. All the transactions are made in cash - it is said that US$5 billion in cash changes hands in this hotel every year. An opportunity is begging here for Hong Kong manufacturers with obsolete stock from their factories in southern China.

Hong Kong can also become a window to the world for the medicine of Xinjiang province. Given its extremes of geography and climate - so hot and dry - the area produces one unique variety of herbs with special medicinal properties. We met Xinjiang medical professionals who were well versed in Western medicine as well as traditional Chinese medicine. They receive frequent lecture invitations to Germany and the US. Some had even been asked to stay in the West, but they preferred to return to China to further their research and help local people.

As well as appreciating the business opportunities unveiled by this trip, the group also saw the potential for tourism. The area has myriad cultural and heritage sites acquired over thousands of year of civilisation. As overseas Chinese with a Western perspective, Margie Yang and Alan Wong confessed to being overwhelmed by the experience of interacting with 3, 000 years of Chinese history, visiting the source of legends and stories told to them as children.

Xinjiang has an abundance of natural resources - primarily oil, cotton and rare earth (much sought after by the aerospace industry). Oil conglomerates from the US, Europe and Japan are arriving to begin oil exploration. East-West trade missions are being revived. The place is buzzing: there is a frontier town atmosphere. As Margie put it, Xinjiang is now the wild, wild west. The key is to control development so that the natural splendours of the area are not destroyed as the Silk Road strides forward into the 21st century.

By Peter M.K. Wong