Standing in the airport luggage hall with clusters of excitable tour groups, it's hard to believe that were it not for farmers digging a well in 1974, Xi'an might not be the tourism honey pot it is today.

The shovel-wielding peasants struck more than water, unearthing a cultural treasure chest buried for more than 2,000 years. Lying crushed and shattered underground, 16 miles east of Xi'an, were 7,000 life-sized, and lifelike, terra cotta warriors guarding the tomb of Qin Shi Huang, the first emperor of united China.

None of the warriors were intact, prompting an unprecedented program of excavation, archaeological research and painstaking reconstruction. Today, the grandly named Museum of Emperor Qin Shi Huang's Terra Cotta Warriors and Horses draws two million visitors annually. Visits to the site are in such demand that Beijing tour agents have created a new product for affluent Chinese tourists—the one-day terra cotta tour. Visitors take an early flight from the capital, jump on a tour bus to visit the warriors, and then fly back home.

The upright soldiers are arranged in infantry formation in three large covered pits. Behind these, the scene resembles a battlefield, with crushed bodies, severed heads and stray torsos strewn across the heavy clay. Emperor Qin's tomb—rumored to be surrounded by mercury waterways replicating China's Yellow and Yangtze rivers—has never been opened, although an adjacent 98-foot-deep stone chamber, equivalent to three Olympic swimming pools and possibly encasing infinite unknown treasures, was recently discovered. Hence, archaeological interest is intensifying to determine the full scale of Emperor Chin's palatial subterranean mausoleum.

Though the warriors have created their own mini-economy, Xi'an, the capital city of central China's Shaanxi province, merits broader consideration. A historical meeting point for peoples from north, south, east and west of this vast nation, Xi'an was the base from which Qin ruthlessly united China's seven warring kingdoms in 221 B.C. The imperial city of Chang'an (meaning Eternal Peace), as Xi'an was then called, subsequently became China's imperial capital for almost 800 years.

Each warrior's unique facial characteristics represent the diverse ethnic make-up of Qin's army, and this diversity is still evident in Xi'an. Ancient Chang'an evolved into the starting point of the Silk Road trade route linking China with Central Asia and Europe. Modern Xi'an still boasts a large Muslim community said to be descended from Arab traders and soldiers who plied this treacherous trade corridor across deserts, mountains and valleys. The splendid Grand Mosque, which subtly fuses traditional Chinese courtyard architecture and tranquil gardens with Persian and Arabic engravings from the Koran, is one of the most intriguing and popular tourist sites in Xi'an.

The optimum time to arrive is after dark, when Xi'an's pride and joy, the magnificent 8.5-mile rectangular city wall, is moodily lit with red lanterns. The crenellated 39-foot-high high fortification was initially built between the seventh and tenth centuries, enhanced during the Ming Dynasty (1368-1644), and fully restored in the 1980s. The ancient capital city it once protected was laid out on a similar grid pattern to China's modern capital Beijing—with the grand, but now destroyed, Daming Palace located at the north gate, like Beijing's Forbidden City.

Visitors can walk, cycle or take a rickshaw tour on the wall. Most scale the steep stone staircase at the South Gate, where a solitary craftsman hand-carves soapstone Chinese 'chop' seals that sell for USD13 to USD50 in the tourism center. Access is also available via the East Gate, where the sweeping elevated cobbled boulevard is less crowded. The imperial majesty of the wall and its pagodas, gates and ramparts contrasts vividly with the drab downtown area, which boasts none of Shanghai's sky-puncturing dramatism, Beijing's architectural experimentalism nor the constructive ambition of fellow former Chinese capitals, Nanjing and Chongqing.

Although Xi'an is viewed as pivotal to China's stumbling Go West policy of channeling urban investment inland from the affluent eastern seaboard, it lags behind its main competitor cities, Chengdu and Chongqing. A visible lack of advanced infrastructure places Xi'an as a rising second-tier Chinese city, rather than a premier league leader. However, new projects are emerging: a subway system is being built, and several large mixed-use developments are springing up around the western fringes of the second ring road.

Commercial investment is largely focused at the Xi'an High-Tech Development Zone. Founded in 1991, the XHDZ is, like its provincial capital counterparts, more of a city within a city. One of China's five premier high-tech zones, it targets investment by Chinese and international companies in the IT, equipment manufacturing, biological and pharmaceutical, and automobile industries.

Aviation is another key economic sector. Airbus and Boeing are active foreign investors and AVIC I, China's leading manufacturer of military jets and civil airplanes, subcontracts much of its component work here. Xi'an is also slated to produce around 50 percent of China's first home-developed jumbo jets—though delivery of serviceable planes is not expected for another 10 years.

At ground level, an under-construction high-speed railway will link the rapidly-growing western city of Chengdu with Xi'an in just three hours, continuing on to another rising economic star, Tianjin, in Northeast China. Last year, Xi'an became a stopping point for trains departing from Shanghai and Beijing bound for the Tibetan capital, Lhasa. The onward journey takes 36 hours and meanders across the spectacular Tibetan Plateau.

Sustained leisure and business travel growth is benefiting the hotel industry. Though only a handful of first-mover international hotels—such as Hyatt Regency, Shangri-La, Sofitel, Sheraton, and the Ana Grand Castle managed by Intercontinental—are in situ, a Deloitte Hotel Benchmark report revealed that Xi'an enjoyed 9.3 percent average occupancy growth, to 61.6 percent, in the first eight months of 2007. This bucked a negative occupancy growth trend experienced by major Chinese cities, including Hong Kong, Beijing and Shanghai.

Room inventory is set to more than double next year. Forthcoming openings include Kempinski, Crowne Plaza and Best Western, with Westin launching in 2010. Meanwhile, Citigroup's property arm is set to invest in the five-star Howard Johnson Ginwa Plaza Hotel. Growing nationwide demand for low-budget business accommodation has resulted in leading domestic economy brands, Jinjiang Inn and Motel 168, and Accor's Ibis opening new centrally-located hotels.

For visitors, Xi'an offers a simple street layout, with compass-point streets radiating from the central Bell Tower. This impressive pagoda-style temple was built in 1582, and now sits in the middle of a traffic circle, with pedestrian access via a subway tunnel. The junction is framed by Xi'an's glitziest shopping malls, and famous-brand fast food restaurants and coffee shops.

To the south is the most accessible entrance to the City Wall. Heading west from the Bell Tower will deliver you to the Drum Tower, marking the entrance to the atmospheric Muslim quarter. Densely packed two-level houses are fronted by young men grilling mutton kebabs, and garrulous women tending open-fronted wooden carts of sweet pastries, candied apricots, figs, kiwi fruits, roasted almonds and walnuts. A labyrinth of narrow lanes is filled with market stalls selling paintings, silk garments and Chairman Mao watches and t-shirts. Beyond these, through a stately arched entrance, sits the Grand Mosque.

Two popular attractions are located beyond the south gate of the city wall. The 210-foot high, seven-story Big Wild Goose Pagoda was originally built in 652 A.D. and affords excellent city views. Southeast of the pagoda is the Shaanxi History Museum, where four large galleries exhibit myriad archaeological treasures unearthed from the region, including pottery, fossils, human skulls, white marble Buddhist statues, earthenware jugs, bronze mirrors and intricately carved tablet stones. The standout exhibits are two miniature armies: the 300 Ming Dynasty pottery honor guards, each around 12 inches high, which guarded the tomb of Prince Qinjian, and the slightly larger and more fearsome Han dynasty painted pottery warriors, each one clasping a shield and weapon.

The new, and equally impressive, Xi'an Museum, adjacent to the Little Wild Goose Pagoda (which, despite its name, is actually 15 stories high) is less well-known, and many taxi drivers don't know about it. Get there any which way, however, as it narrates the history of imperial Chang'an, and exhibits a dazzling collection of historical treasures, including painted pottery warriors, stone coffins, jade seals and an impressive array of Buddhist statues and mini stupas.

For an after-dark insight into how local tourists prefer to sample Xi'an's ancient history, head to Tang Paradise, a vast recreation of a Tang Dynasty Palace with lakes, apricot gardens and several temples, south of the Big Wild Goose Pagoda. At 7:45 p.m. each evening, large crowds gather on the palace steps to watch a virtual-reality animated show created by lasers beamed onto a moving screen comprised by Asia's largest water fountain. The 30-minute spectacular, featuring ancient warriors, dancing ghosts, a cartoon dragon, and a wicked voluptuous temptress, is bolstered by a pulsing soundtrack, fireworks and firebombs. It's quantum kitsch, but utterly compelling—and a fascinating glimpse of yesteryear Xi'an repackaged for China's twenty-first-century nation-trotter.