It's only my first night in Guilin, yet I'm already starting to realise that this is precisely what makes the destination so unique - this peculiar mix of stunning natural beauty, and slightly psychedelic strangeness. Our boat putters round the bend and we find, in another pagoda, a punky girl band playing transparent mandolins and flutes while performing a traditional dance.

Another few hundred metres and we find a small group of bamboo rafts, lit by green lights and manned by pyjama-clad gents with cormorants by their sides. The men are chanting and bobbing up and down and, just as I start to wonder if this is some kind of Chinese river rave, the birds dive into the water and return a few moments later, triumphantly clasping fish in their beaks.

This, our local guide Maggie tells us, is a 1300-year-old tradition that used to earn the fishermen a living. Due to competition from modern fishing techniques, however, it's now practised mostly to entertain tourists.

"The birds are trained since birth to catch fish for their master," she says. "There's a small noose around their neck to stop them swallowing fish they catch." The fishermen's chanting and dancing, she adds, is all just encouragement for the birds to take the plunge.

The otherworldly experiences continue the next morning, when for a moment I think I've stumbled into Tolkien's Middle-earth. Soaring forest-clad mountains jut up around the city like crooked teeth, which are endlessly flossed by the two rivers and four lakes that flow between them.

The best way to get the lay of these mountains is to climb one of them. We start with Solitary Beauty Peak, the original centre of Guilin in the Princes' City Scenic Area. Our thighs burn like the fires of hell as we ascend the 300 stone steps, but it's worth every painful second. From the top, it's nothing but hulking limestone mountains, strips of glossy green river, a smattering of low buildings, and distant hills so blurred and blue that for a second I think they're clouds.

This is the stuff that has inspired Chinese artists and poets for centuries. And, as Maggie tells us at least half a dozen times over the next few days, the stuff that stirred an astute Chinese governor 800 years ago to famously announce, "Guilin's scenery is the best under heaven."

As we continue our explorations, I start to think it might be. There are the magical views from another craggy peak, Folded Brocade Hill, made even sweeter by the marble slide carved into the side to get us back down. There's the curiously shaped Elephant Trunk Hill, the symbol of Guilin that looks like – you guessed it - an elephant dipping its trunk in the water. And, when the day becomes unbearably hot, there are the subterranean delights.

Because Guilin is founded on porous limestone rock, more than 3000 underground caverns are concealed beneath the city. This is also why there's a lack of tall buildings in the city; the ground isn't solid enough to support them.

Reed Flute Cave has been around for more than 180 million years, and wall inscriptions near its mouth tell us tourists began visiting way back in the seventh century. We enter, the temperature drops 10 degrees, and things start to get a little weird again. Stalactites and stalagmites lit by multicoloured lights reach from the floor and ceiling, creating lumpy sculptures that look like wet sandcastles. Maggie points out signposted descriptions like "centipede scared by the magic mirror" that leave us wondering whether the writers were indulging in something a little stronger than rice wine when they penned them. In the cave's belly is the Crystal Palace of the Dragon King, a cavernous grotto that once served as an air-raid shelter during World War II, and is now an occasional events space. A short animated film depicting how the caves were formed is projected onto the ceiling, while two life-sized holograms dance to classical music to our right. The beautiful and the bizarre, merging once again.

The next day we rise early to take the 2½-hour cruise to Yangshuo along the Li River. It's hot, but we brave the morning sun to stand on the upper deck and watch hundreds of karst peaks slip by like sleeping giants, their inverted reflections shimmering on the water. It's the ideal way to observe life along the river. Children flap about in the shallows. Bamboo rafts covered with sun shields ferry tourists about. Fishermen cast out their nets. Farmers tend small squares of farmland.

We disembark in Yangshuo and find ourselves in the middle of a buzzing local market, selling everything from antique teapots and jewelry to oversized fans painted with Chinese landscapes. From here, the town spans out into a series of laneways lined with small shops and teahouses, and restaurants and bars that thrum with live music at night.

We'll have to save those for later though. Right now we're off to see Yangshuo's famous Impression Sanjie Liu night show. It's performed on the Li River with the hills as its backdrop, creating what might be the world's most gorgeous natural theatre.

We can't understand a word of the show (it's all in Mandarin) that apparently tells the tale of the minority groups living in the area. But it doesn't matter in the slightest. More than 600 performers, including 400 local fishermen and 200 professional dancers perform an extravaganza that fuses folk music and dancing, spectacular costumes and bright lights (of course), all choreographed by Zhang Yimou, the guy who directed the Beijing Olympics opening and closing ceremonies.

Our second day in Yangshuo begins with sunrise tai chi in our hotel's garden with Master Huang, who began learning the martial art at just 12 years old. He teaches us a series of graceful movements that we vow we'll continue practising once we get home, as well as some simple philosophies based around letting go and staying calm.

In the afternoon we grab pushbikes from our hotel and cycle to Moon Hill (no prizes for guessing what this one resembles), then escape the sweltering heat at the Gold Water caves on the way back. Another fairyland of brightly lit stalactites and stalagmites, but with the added bonus of ice-cold mud baths. We float around in the gooey sludge, giggling like kids at the feeling of it squishing around our bodies, before washing off and plunging into the hot springs.

The alarm is set early the following morning since we're on the road again. A two-hour coach ride sees us in Longji, in the heart of the great rice bowl of China. Rain sifts down as we step off the bus, but that doesn't stop us from immediately clicking away at the striking rice terraces that cling to the steep hillsides all around us.

The Chinese have been cultivating rice here for at least eight centuries, and it has transformed the landscape. We hike along the thin strips of hand-carved terraces that twist towards our destination, Ping'an village. Along the way we pass timber houses built into the hills, and meet women from the Zhuang, Miao and Yao minority groups, the three largest minority groups living in this region. The Yao women dress in hot pink embroidered jackets and cut their floor-length hair, which they twist on top of their heads, only once in their lives between the ages of 16 and 18.

Once we reach Ping'an, I have just enough energy left to haul myself up one final hill to watch the sunset. At least that's what I plan to do, before I get distracted by bargaining with Yao stallholders to buy my very own handloom jacket.

We spend the evening dining on the local speciality of smoky rice cooked over an open fire in bamboo tubes, sleep in a traditional stilted wooden guesthouse, and rise early to watch the morning sun spill over this mosaic of kaleidoscopic greens. One final moment of stunning natural beauty, with just enough psychedelic strangeness thrown in. 

FIVE MORE THINGS TO DO IN GUILIN AND YANGSHUO

1. Cloud 9 Cooking School, Yangshuo The experience here begins with a guided tour through a market, where you're taught about the ingredients to be used during your cooking class. You'll make spicy pork dumplings, beer fish (a delectable specialty of the region) and more. See facebook.com/cloud9cookingschoolyangshuo.

2. Kayaking on the Li River, Yangshuo Watch life on the Li River pass you by as you kayak its smooth waters. Two or three-hour trips available, through wendywutours.com.au.

3. Tea Science and Research Institute, Guilin The institute has been around since 1965 and was the royal tea garden during the Ming Dynasty, 400 years ago. Take a tour through their organic tea plantation, before experiencing a traditional Chinese tea ceremony. See guilintea.com.

4. Tour Jingjiang Princes' City, Guilin Covering almost 20 hectares, it encompasses Jingjiang Palace and Solitary Beauty Peak. Originally built in 1372 under the first emperor of the Ming Dynasty, the palace includes temples, pavilions, terraces and halls. It now also functions as the Guangxi Normal University. Donghua Rd, Xiufeng, Guilin; call +86 773 280 3149.

5.  Rock climbing, Yangshuo If simply hiking up those beautiful limestone towers just doesn't cut it for you, this is an option for the adventurous. There are routes for both beginners and pros, and climbing is best from late September to December, when it's not too hot and the rainfall is low. Available through wendywutours.com.au. 

TRIP NOTES

MORE INFORMATION

visitguilin.org

GETTING THERE

Cathay Pacific flies four times a day from Sydney and three times a day from Melbourne to Hong Kong, then connects to daily flights to Guilin with its regional airline Dragonair. From $991 per person return. See cathaypacific.com.au.

STAYING THERE

Shangri-La Guilin has 449 rooms and suites from about RMB 695 ($130) a night. See shangri-la.com/guilin.

Yangshuo Resort, set among the limestone hills on the banks of the river, has rooms and suites from about RMB 980 ($185) a night. See yangshuoresorthotel.com.

EATING THERE

Wei Xiang Guan (Taste Fragrance Restaurant in English) in Guilin is a specialty rice noodle restaurant that's been serving up the region's famous rice noodles since 1947. They're still doing a damn good job of it, too. In Zongshan Middle Road and Yiren Road.

Yangshuo's Pure Lotus vegetarian restaurant is crammed with gorgeous antiques, has iPad menus, and the chefs work wonders with tofu and eggplant. See yangshuomagnolia.com/purelotus.

TOURING THERE

Wendy Wu Tours has a Guilin, Yangshuo and Longji package from $650 per person twin share that includes four nights' accommodation with daily breakfast, private touring with local guides, entrance fees and some meals. Call 1300 727 998 or see wendywutours.com.au.

The writer travelled courtesy of Wendy Wu Tours.