Every morning Mohammed Gurdan rises early and climbs the rickety ladder to the fourth floor of his home in Kashgar's old city. There, as dawn breaks, he feeds and waters his 70 pigeons and waves them off to flutter out across the sand-coloured buildings that sprawl into the distance.

Like scores of men here, he spends hours in this rooftop retreat with his crooning, strutting companions. The lure of pigeons, say locals, is 40 times greater than that of a beautiful girl.

“There is always something interesting about birds,” explains Gurdan. “I have cared for them for 23 years. My father, my grandfather, both kept pigeons here - it's the custom of our family.”

Kashgar is full of such customs, such stories and such homes. This 2,000 year old oasis city stands at the westernmost part of China, where north and south Silk Roads met - and a frenzy of trade resulted.

These days travellers along the route come by bus or plane rather than by camel or on horseback; laden with cameras rather than goods. The Silk Road running westwards through China is studded with attractions from Xi'an, home to the Terracotta Army, to the precious Buddhist artworks in the caves at Dunhuang and the oasis of Turfan, close to the ruined ancient cities of Jiaohe and Gaochang. But even by these standards, Kashgar - to the west of the vast Taklamakan desert - is a jewel.

The old section is “the best-preserved example of a traditional Islamic city to be found anywhere in Central Asia,” the architect and historian George Michell wrote last year. Filmgoers may recognise it from The Kite Runner, where it was used as a double for Kabul.

To walk through the narrow lanes of the old city is to walk into living history. There's Tohti Hajim, the blacksmith, who has hammered out horse shoes for 30 years, in a tiny workshop inherited from his father. Eighty-year-old Davut, who, from the age of 15, has risen at three or four each morning to load his bicycle with bowls of fresh yoghurt and wheel it from door to door. Mohammed Yusuf, who has raised 10 children in his family's 120-year-old home. He beckons us in to admire the elaborate painting, carvings and lavish wool carpets in their reception room. While some residents offer access in return for money, he refuses payment.

Around 220,000 live in this labyrinth of mud, brick, straw and wood; some homes date back four or five centuries. A few of the streets have been cleaned up and neatly paved for tourists; but for the most part, when you explore the tiny alleys, you are walking straight into people's lives. Craftswomen stitch doppas, the traditional four-cornered hats, which take 20 days to make. Crop haired girls in bright frocks and mismatching plastic sandals giggle and shove as they see strangers; then sing and dance for their new audience. The real pleasure here is simply to wander and watch.

Now these streets are being ripped apart under a GBP300m government project to transform the face of city. The overhaul will see up to 85 per cent of the area razed and many residents relocated. Demolition crews have already moved in and construction sites scar the old city. “It's a bad thing,” a young girl tells me, as she loitered on the edge of wasteland. “They're making us all go a long way, to high rises.”

This is the last chance to experience this world; tearing down the old houses will rip apart the fabric of life here. Without courtyard homes, many women will no longer have outside space to go unveiled. Artisans will make way for modern stores. The danger, said one exile group recently, is that the area will become “an open-air museum of Uighur culture”.

Muslim Uighurs make up almost half of the Xinjiang region's 22 million inhabitants. They have their own Turkic language, their own music, their own foods - even their own (strictly unofficial) time zone, two hours behind Beijing's. Yet many complain their culture is being rapidly eroded by Han Chinese immigration, controls on their religion and aggressive economic development.

And that explains why demolition is a highly sensitive topic; most residents were reluctant to speak about the changes, despite the fact we had left our guide behind. Several claimed improbably that they had never heard of the plans.

“No one wants to go,” a young Uighur says bluntly. “I have been here since I was a little boy; it's our whole life. But there's no alternative. They say it's not safe. This part will be knocked down next year; they have already started opposite.”

The government argues that it has no choice it fears the old buildings are a fire risk and would collapse in an earthquake like that which hit Sichuan last year, killing an estimated 90,000. They say many are shoddily built, lack amenities and are relatively recent.

There is little enthusiasm for suggestions that the city should reinforce and update buildings ideally suited to the local climate and in many cases owned by the same family for years. Wholesale demolition and reconstruction projects are common across China where mile upon mile of historic architecture has fallen to bulldozers.

As in those cases, the government believes the overhaul will accelerate development. There will still be some historic buildings and tourism will be more convenient in the new “old city”. You can expect better toilets and more English language signs. But the vision laid out by officials - apartments, modern plazas and “Uighur-style” architecture - lacks the authentic magic that has always lured travellers to Kashgar.

You get a taste of the sanitised future at the Grand Bazaar, revamped a few years ago. It is worth a visit; it still teems with locals buying blankets, headscarves and spices, as well as tourists browsing the selection of lutes, sheepskin hats and replica daggers. But its wide concrete aisles capture little of the excitement which made the market famed along the Silk Road.The livestock section has been hived off and shunted a few miles south of town, but it's there, at the packed Ivan Bazaar, that the mercantile spirit of Kashgar comes alive each Sunday. A boy of no more than eight is shearing a sheep; the asthmatic bray of donkeys rakes the air. Men step aside nimbly as a bull, pulled down from a truck, shakes its owner loose. From time to time even camels show up for sale here, fetching 15,000 yuan “if it's a big one”.

There are other spots worth visiting outside the town itself; notably the 17th-century Abak Khoja Mausoleum, also known as the Tomb of the Fragrant Concubine in honour of a beloved consort of Emperor Qianlong. Its exterior is exquisitely glazed with tiles in 20 shades and 70 patterns; the grounds include several small mosques, still in use today.

And even in modernised parts of the centre, old habits cling on. Nondescript modern shops may have replaced the bazaar which surrounded the Idkah Mosque, but after Friday prayers - when 20,000 can crowd there - vendors rush to the steps to sell their wares to departing worshippers. There are baskets of yellow figs and trays of perfume; new prayer mats and basins of corn cobs. One man, standing on the plaza, waves an animal pelt and brandishes a bucket of marmot fat, said to be medicinal.

Just behind the mosque, melon sellers standing on the road carve off single slices dripping with juice; Xinjiang is famed for its fruits. Though you should stop into a restaurant for polo, the traditional dish of mutton, carrot, onion and rice, much of the best food is bought on the street here. Fresh nan bread, hot from round clay ovens, is dipped in onion and sesame. A young man halts to sample rose petal jam and promptly buys a plastic bagful - then revs up his motorcycle and drives off.

Like the jam-buyer, Kashgar's residents want the benefits of both old and new. No society is static, least of all one based on trade and poised at a crossroads. Demand for Tohti Hajim's horseshoes has fallen; though ponies and carts are still common, many farmers putter past on motorised tri cycles. On the street I pass an old Uighur man in his doppa, bellowing into a mobile. Women are resplendent in leopard print and sequins as well as vivid Atlas silks.

But the abruptness of the modernisation is of another order from these changes.—Dawn/Guardian News Service