By Louisa Lim BBC correspondent in Beijing

Old buildings are being torn down in a frenzy of modernisation

On the surface, this maze of enclosed courtyards, one-storey houses and narrow stone passageways seems to be a picture of traditional Chinese life.

But against this peaceful backdrop a drama is being played out, pitting tradition against modernity, and individuals against the power of the state.

Beijing's old city is being swallowed by the urban sprawl of shopping malls and six-lane highways. Whole blocks are being razed as China moves to create a city of the future to host the 2008 Olympics.

In one area undergoing redevelopment, I met 47-year-old Liu Changshan by chance. He invited me to visit his house, which is facing demolition. It stands alone in a wasteland of broken bricks, the only remaining structure in the entire block.

In many instances, people are going to benefit because a great deal of the housing in Beijing, as well as other cities and rural areas, is very substandard Lawyer Lester Ross

He described his emotional ties to his property.

"My mother and father got married here," he said. "They bought this place before 1949. We're six children and we all grew up here.

"Now my mother and father have both passed away. I can't bear the thought that this house will be destroyed."

But Mr Liu is refusing to go for financial reasons. He said the compensation offered was not enough to buy a new place, even in the suburbs.

He will get $1,000 per square metre, less than half the market value of the site. And the personal cost is enormous - he has already sacrificed his 20-year-long marriage.

"My wife is someone who works hard, she couldn't live in these conditions. We really felt strongly for each other but every day we argued about our situation. I knew we couldn't go on, so we had to separate, then we divorced."

Mr Liu is among those paying the price for the city's facelift. One Swiss non-governmental organisation estimates 300,000 people have been evicted in Beijing to make way for Olympic projects.

But officials have argued that figure is too high, and they insist those relocated benefit by having an average of 40 sq m more space per family.

Officials turned down my requests for an interview.

'Benefits'

Lawyer Lester Ross often represents developers. He believes that many residents are happy to take the compensation and move.

"In many instances, people are going to benefit because a great deal of the housing in Beijing, as well as other cities and rural areas, is very substandard," he said.

If they knock my house down forcibly, I'll set myself on fire Beijing resident Liu Changshan

In the past, he has had to tackle problems caused by forced evictions by subcontractors working for the city government. But he believes the attitude is changing.

"One of the reasons why construction proceeded so fast is because they have been able to disregard what are considered to be basic rights of people who are residents or who maintain small businesses.

"If you just bulldoze them out of the way, then of course new construction can go on much faster. Beijing, in particular, is concerned now with the greater attention that's coming with the Olympics. Beijing doesn't want the great construction that's under way to be tarnished by public protests," he said.

'Damage done'

Recently the government announced it will demolish fewer buildings in a bid to tackle growing discontent.

But if Ye Guozhu is anything to go by, the damage may already have been done. His family's house was knocked down with their possessions still inside.

Unhappy with the compensation offered, his brother appealed to the authorities but got nowhere. Desperate, he tried to commit suicide in Tiananmen Square and was given a two-year jail term.

Mr Ye is deeply embittered by the experience.

"This unchecked demolition over the past few years has changed the way that people think about the party and the government. Now people think our government isn't governing for us. They're bandits and hooligans. It's a very deep problem. People have already lost confidence in the government," he said.

He now liaises with others who have lost their homes. His movements are monitored by the authorities and I was detained when I visited him, an indication of just how nervous the government is.

Beijing is being spruced up, ready to host the Olympic Games

And he is not the only one who has turned against a government he once supported.

"These demolitions aren't being carried out properly. They're not taking account of people's rights. Everybody thinks that," said Liu Changshan, the man whose house faces demolition.

Then he pulls back some blue plastic sheeting to show me six huge containers of petrol lined along the walls.

"I'm prepared to take this fuel and pour it over my body. If they knock my house down forcibly, I'll set myself on fire," he said.