‘It’s a living museum,’ says Li Zhengde, a professional photographer, while excitedly snapping photos of Qing archways and Mao-era tenements. He’s far from the only one who comes to Pingyao for its photogenic, old-world looks. Since 2001, Pingyao has capitalised on its surroundings with an event that’s thoroughly modern: the Pingyao International Photography Festival. Li is one of many notable artists who have been invited to talk or exhibit at this event over the years.

But let’s go back to the beginning. The story of how this town in landlocked Shanxi province was built up with such mesmerising architecture is told in Rishengchang, China’s original draft bank, founded in 1823, which is now a museum. It’s here that Ming-dynasty merchants evolved to become Qing-dynasty financiers. Shanxi businessmen used cheques instead of silver coins to protect monetary transactions from banditry, modernising banking in China and solidifying Pingyao’s standing as a financial centre of its time. At its zenith the bankers ran 57 branches nationwide and had clientele as far away as India.

The profits from banking were spent on fine temples and town houses, which make up today’s architectural treasure trove. Of these the City God Temple is a real highlight. It’s a sacred Taoist site that venerates, among other deities, Shui Yong, a Zhou-dynasty paragon and patron saint of Pingyao. But beyond the traditional feng shui setup – the drum and bell towers, the god of wealth shrine – it is the temple’s blue-glazed roof tiles that distinguish it from other holy sites of a similar vintage.

Pingyao’s prestige waned during the chaotic last days of the Qing period, as financial institutions introduced by the West began to take over. The relative isolation of Pingyao’s location spared it the ravages of the 20th century, yet it has only been during the past 20 years that Pingyao’s fortunes have been rekindled, this time as a tourist destination.

The annual photography festival has been an influential part of this revival. Every year, the event’s arrival transforms the town into an exhibition space. Using both indoor and outdoor space, the old quarters are turned into contemporary galleries. Curious art students, Beijing hipsters and photography enthusiasts point Nikons at everything and anything, infiltrating the ranks of holidaymakers. It’s certainly the biggest and longest-running photography festival in China, and one of the largest in the world.