Blood price of fear and greed: Yan Lianke's novel exposes the truth about China's hidden epidemic

Clarissa Sebag-Montefiore meets him in Beijing

In Yan Lianke's apocalyptic book, Dream of Ding Village, an entire community in central China is decimated by "the fever". Locals who, a decade earlier, greedily sold their blood for cash are now dying from a mysterious illness. Desperate for wood to build their own coffins, they prowl the streets with hatchets and saws and tear down every last tree. The landscape becomes barren and bare, the sun scorches the unsheltered earth, and the plain turns into "a great thick lake of blood".

This biblical narrative set in the vast province of Henan – widely seen as the cradle of Chinese civilisation – is, in fact, based on true events. Yan Lianke is a prolific and outspoken author whose books are regularly banned. Dream of Ding Village (translated by Cindy Carter; Corsair, £12.99) is his fictional account of one of China's most catastrophic cover-ups: the notorious blood-selling scandal and subsequent Aids epidemic of the mid-1990s, when commercial companies, nicknamed "blood-heads", cajoled peasants into flogging their blood for cash.

The scheme – spearheaded by local authorities, with the army, coal mines and even factories setting up mobile blood-collecting stations – proved fatal. Plasma, extracted from the blood before being pumped back into the donor, had been mixed together in a polluting pool. Equipment was routinely re-used. HIV infection spread with tens, perhaps hundreds, of thousands affected.

"The village was full of the walking dead," remembers Yan Lianke, now 53, slumping away from his desk and shaking his head. It is a crisp Sunday evening as we talk in Yan's office, where he works as a professor, amid the vacant halls of Beijing's Renmin University. The room is cold and bare: a lone bookshelf stands empty against the fading whitewashed walls and Yan courteously hands out paper cups filled with hot green tea. The kettle sits on the floor and is the only accessory in the room.

"Up to 30 million people lost their lives during the Three Years of Natural Disasters [the 1958-1961 famine that followed Mao's calamitous Great Leap Forward]. The intellectuals in China chose to keep silent," says Yan emphatically. "This time, I had to find a way to make my voice heard."

The Aids outbreak holds special significance for the author, a Henan-born local and son to illiterate peasant parents. Yan first heard of the disaster via an anonymous letter posted through his door in 1996. Like most of China's population at the time he had never heard of HIV/Aids.

Terrified that the crisis might deter investment, the government initiated a crackdown, banning media coverage and propagating a vicious cycle of police intimidation. As late as 2008 a Belgian journalist and his TV crew were attacked for trying to talk to Aids activists. Not to be deterred, Yan – who has won two of China's most prestigious literary prizes – went undercover over a period of three years. He posed as the assistant to an anthropologist and visited villages laid to waste by the disease.

Gao Yaoije, a country doctor and Aids campaigner, relayed to Yan, in the censor-baiting newspaper Southern Weekend, how blood was stored in soy sauce bags and mixed with beer to increase the volume. Neighborhood pools, used to wash the bottles, were "dyed red" and swarmed with mosquitoes. When donors became dizzy, blood-heads would allegedly shake them upside down to combat the faintness – a detail told with Yan's trademark grim black humour in the book.

Originally, the author planned to write a non-fiction account to educate a population which knew of Aids only as the "nameless fever". Instead, he disguised the story as fiction, hoping to guile the often illogical censorship system. As such, Dream of Ding Village is a giddily surreal and ultimately nihilistic depiction of a society – driven by greed and ignorance –in the throes of collapse. Despite the author's attempt to self-censor, and an initial print run of 150,000 copies in the mainland in 2006, the book was banned.

Five years on, Yan still feels a "deep shame and regret" over Dream of Ding Village; a book which "never met my own ideals". Self-censorship, he says, clasping his tea under the harsh strip lighting of his office, is a "bigger barrier for Chinese writers than government censorship. It is in our blood. It kills creativity while we are writing – we are unable to think freely."

Self-imposed cuts included an ambitious story-line in which China pumps blood through underground pipes to the US. The conceit isn't quite as outlandish as it sounds – a blood-selling delegation did visit the US offering "cheap blood" from Henan in the 1990s. America declined. Yan focused on one village, thereby avoiding an indictment of high-up officials, and omitted disturbing scenes of poverty-stricken victims wandering naked with oozing sores.

Despite this, the novel remains a grotesque parable of the dire consequences of China's capitalist love-affair and unrestrained development. In a particularly potent scene an elaborate coffin is engraved with all that the deceased could desire in death – including a refrigerator, washing machine, and home-entertainment centre. In another, villagers are excessively grateful to the local task force for providing a few cut-price coffins. After all, they ask: "Who ever heard of a government that saw and heard nothing, said and did nothing, took no action and showed no concern?"

Such risqué subject matter is nothing new for a novelist who has had three books banned, has been embroiled in a legal case with his publisher, and who constantly speaks out on the dire state of the arts in China. Born to a deprived family, Yan first harboured desires to become a writer to escape the brutal and back-breaking work of life in the countryside. His inspiration was simple: in the mid 1970s, aged 18, he heard about an author who had been transferred from the unforgiving Great Northern Wilderness to Harbin to work as a writer. "That impressed me," he recalls.

Yan enlisted in the People's Liberation Army and rose to prominence as a propaganda writer. His days espousing communist rhetoric were numbered, however. In 1994, he published his first novel Xia Riluo – and was forced to write self-criticisms for four months. In 2004, Yan was made to leave the army after Shuo Huo (or Enjoyment, currently being translated into English), came out. It was a wacky satire about the money-making schemes of a local authority that forces disabled villagers to perform in a travelling freak show so they can buy Lenin's embalmed corpse.

Most infamously, Yan penned Serve the People!, his pitch-perfect novella, in 2005. In this biting satire, set during the Cultural Revolution, an adulterous couple attains soaring orgasms from defacing icons of Mao Zedong: no mean feat at a time when destroying an image of the Great Leader meant death by firing squad. The book won plaudits abroad and an underground following at home.

Given Yan's reputation as both award-winning novelist and forthright critic, I'm curious to hear what his family thinks of his chosen career. They are aware, he comments somewhat dryly, that he is "disliked by the government". Ultimately, being a writer "can never compare with being an official" in the eyes of villagers.

Yan remains close to his peasant roots and continues to speak with a strong Henanese accent ("the accent of God," he said at The Bookworm International Literary Festival in Beijing last year, "coated with a thick layer of soil"). He is un-sentimental about this rebuttal. "Farmers need support from decision makers. Writing can't help them much. [My family] never reads my novels – my books mean absolutely nothing to them."

Still, the author – who in person is determined and unassuming, with a mischievous sense of humour – is unrepentant about touching nerves. He expects other authors to be the same. In March, at this year's Bookworm festival, Yan delivered an austere assessment on writers who have "failed to face up to the complexity and absurdity of life in China today".

"We have not succeeded in writing about the difficulties and sufferings of the very lowest level of society; nor have we written about the true soul of modern China," he announced. "Writers – when facing their own history and reality – should hang their heads and apologise to the Chinese people."

Yan does not exclude himself from this condemnation of the collective "guilt" of Chinese writers – a responsibility he feels deeply, believing that he too has failed. While he is a child of the Great Leap Forward and Cultural Revolution, many popular authors today were born in the post-1980s "me" generation. As beneficiaries of the one-child policy and an explosive economic boom, they focus on the individual rather than on history or politics.

But should Chinese authors be held responsible for not speaking out when faced with such a repressive regime? In recent weeks the government – fearing unrest amid upheaval in the Middle East and calls for a "Jasmine Revolution" – has led a crackdown on artists and dissidents. Most notable is the arrest of Ai Weiwei – famed for his contribution to the Olympic Bird's Nest stadium, and currently exhibiting in the Tate Modern's Turbine Hall.

Yan is softly-spoken but firm in his judgement. "Writers should feel guilty for not telling the truth," he says, pointing out that literature has omitted vast swathes of China's history – from the Cultural Revolution to the Anti-Rightist Movement. "Writers avoid looking directly into reality, both past and present." He pauses. "It's just despicable."

Progress in freedom of speech, he adds, remains negligible. Despite this, he has faith that "the situation will take a positive turn in the future, because activists are fighting hard for it". For inspiration he draws on a metaphor: the booming economy is like a fast train – bound to slow down – and culture is like a turtle, slowly but surely reaching its destination. "If it just keeps moving – someday, somehow – there will be a balance between the material and spiritual."

For now, Yan believes he has reached "a new kind of freedom" with his latest work Si Shu (Four Books), which he self-published and sent out to a few hundred friends. It is, he says, the first book which he has composed entirely for himself – choosing to ignore both commercial pressures and the constraints of the censors. To finish, I ask the golden question: If you could write any book in the world, what would it be? "1989 [the Tiananmen Square Massacre]," he retorts, without missing a beat. "It's many a Chinese writer's dream." But, he admits, "speaking with your soul – it's easy to say and very difficult to do in China".

Additional reporting by Ge Jingwei