The road to this town, treacherous and narrow, ends after kilometers of knee-deep mud on a mountain path that looks down upon the clouds. It was market day, and the gently sloping main street was so choked with people and goods changing hands that for all the tattered clothes and sun-creased faces, the place radiated a measure of prosperity.
The magic of the larger market that has lifted so much of China out of poverty has bypassed most of this region, where peasants live as they have for generations, carrying firewood on their backs and farming the steep, terraced slopes by hand. But Banlao, otherwise lost in the shadows of tall mountains, where neighboring Myanmar looms visible in the distance, has another source of wealth.
The authorities say 10 percent of China's illegal narcotics traffic enters through the surrounding Lancang Prefecture and 85 percent of the arrests in this part of southwestern Yunnan Province are made in this one hamlet.
Local folk say that perhaps 70 percent of the shops on the single business street were built by people who made their money in the heroin trade, and that half of those arrested have been executed.
Heroin has a particularly repugnant resonance for the Chinese government, tied up so deeply as it is with the country's subjugation at the hands of Western powers in the 19th century, when British trading companies promoted opium ad-diction among Chinese as a way, in part, of balancing their trade.
Drug use was almost eradicated under Communist rule but returned after the easing of border controls and social constraints in the 1980s. Since then, strenuous campaigns have done little to stem the flow of narcotics across the border from Myanmar and Laos.
The poverty here is one cause. The nearest junior high school is still several miles away, on a road so bad that only tractors can navigate it. Electricity arrived five years ago, and mobile phone service came just last year.
Some here say 1 million yuan, or about US$120,000, is not an uncommon payback for those who are willing to hike the 30km or so into Myanmar to sneak the drug back into China.
"The police have been fighting this problem intensively since the 1980s, but people are so poor here there's no difference between being alive or dead," said Mo Zaigang, 36, a peasant who together with friends spoke with a stranger in the back yard of a tumbledown home.
"The only way is going out," he said, using the common shorthand for seeking one's fortune in the drug trade.
With that, the men's conversation shifted to the ebb and flow of misery here, from the severest times they could remember, before the reforms begun 25 years ago, when collective farming was still in force. One man said people ate leaves off trees to survive.
As China's economic liberation gathered speed in the 1980s and the borders opened a bit here, many people became migrant workers on poppy farms in Myanmar, getting their first taste of the heroin trade. Then came outright trafficking, followed by severe crackdowns.
But the enforcement efforts have hardly dented the drug trade because, many here say, poverty is not the only cause. Official corruption, they say, a plague that spares little in China, is also a factor.
Tales abound of how relatives of trafficking suspects have offered large sums of money to the police, only to have the cash disappear and their relatives sent away for imprisonment or execution.