Since the Han 汉(hàn)Dynasty (206 BCE-220 CE), and possibly even before then, stories about ghosts have been very popular in China. These stories were not only entertaining but were also used to explain various unusual phenomena that people had experienced. Some of them are derived from Buddhist beliefs such as karma and reincarnation.

In Chinese tradition there is a clear distinction between good spirits – shen 神(shén) , and bad ones - gui 鬼(guǐ). The good include the ancestor spirits that benefit their families, provided that they are properly treated. All the shen had once been mortals who had done good deeds throughout their life but died without leaving a son. In contrast, spirits of people who had drowned or been hung are considered dangerous. They cannot be reborn until another person who will drown or be hung in the same place will replace them.

 In the view of the Buddhists, the world was conceived of as surrounded by besieging demons with a weird appearance, such as two heads, three heads or even twelve, three legs, eyes set vertically, red nose, one eye, etc. Alongside these demons there were grass demons, believed to poison people who gather fruits, demons who kill people in the rivers, and those who kill boys during spring time and girls during autumn. Giants, white-headed, black-faced and white-haired, about ten meters tall, were believed to spread ninety diseases.

The Chinese used to protect their houses against demons and bad luck by means of gate gods, whose images flanked the gates to prevent Evil Spirits from entering. These guardian gods were great historical figures who had been deified after death.

According to an old Chinese belief, spirits dwell in the human body. It was customary to think that each of the five main organs of the body (liver, lungs, heart, spleen and kidneys) possesses its own spirit. Religious Daoists went even further, believing that 36,000 gods inhabit the human body. However, it was more customary to believe that only two cosmological powers dwell in the body – yin and yang: po 魄(pò) was considered as representing yin, and hun 魂(hún)[1]– as representing yang.

Po is associated with earth, water, dark, etc. It dominates the physical nature of the human being and represents the animalistic nature and basic impulses that appear already in childhood. Po is permanently found in the body as the soul that imbues it with life. After death it seeps into the ground; but if annoyed it may return and appear as a ghost   鬼(guǐ) , bringing trouble to its family members.

Hun, as the soul that represents yang, is associated with the sky, fire, light, etc. This soul controls the intelligence. It only enters the body at some point during the first month after birth, which is why abortion is not considered a sin in China. At the moment of its entrance into the body it starts to develop, and as the child grows up it becomes stronger, especially after education begins. Later in life it reaches a stage of completeness, but not before the age of fifty. The hun dominates a person's nature, generosity and honesty. It is the qi - the breath, which is free to wander throughout life, death and dreaming.

In the moment of death the hun ascends to heaven and joins the other spiritual entities 神(shén)  that dwell there. Since intellect and culture are more sublime than feelings and impulses, the hun dominates the po as long as they both dwell in the body. The hun continues to exist for a long period after death and is very concerned about those left behind, if they bring the appropriate sacrifices. However, if they do not fulfill their obligations, the hun is forced by hunger to steal sacrifices offered to others. It may harm its relatives and be exploited by magicians for their own ends. The hun does not survive the burning of the body, which is why the authorities, who encourage cremation, present the belief in hun as superstition. The prevailing belief was that hun could influence the physical world. Demonic spirits were believed to cause people to act in opposition to their true will or nature. 

The spirits, like humans, have appetites and passions. Their cities, located in heaven and beneath holy mountains, are invisible. The government of the spirits reflects the government of the living, at least in everything associated with the system of law. The task of those who decided on the fate of humans in heaven and under the mountain Tai, was to examine the records of the deceased and decide whether the length of life allocated to an individual during his or her childhood had expired. They would shorten life by 300 days for heavy offences, and by three days for light ones. The souls of the dead could complain against the living who had committed crimes against them during their life. After death, the soul of the deceased had to respond to such complaints in the court of law of the next world.

The Buddhists, who have always encouraged cremation, believe that after passing through several departments of hell in which the hun is punished for its sins, the soul finally reaches a dark room in which it seeks a skin to wear, which will determine whether the deceased will be reborn as a man, woman or animal.

 Daoism differs from popular Chinese religion and from Buddhism in its belief that po - the body, and hun - the soul, remain after death. Likewise, the Daoists believe that in addition to the heavenly kingdoms of the immortals, there are also 36 caves, a kind of paradise located beneath the holy mountains.

For most Daoists, redemption means rebirth of body and soul, and becoming an immortal who deserves a position in the bureaucracy of the next world. Those who have not performed good deeds during their life will pass to the next world and be extinguished.

In traditional China people engaged in fortune-telling, offering sacrifices, communicating with the spirits through a medium, buying amulets and worshiping their ancestors. The Daoists believed that the spirits of the dead are very active at night and can change their shape. A spirit may appear as a snake, moth, fox, tiger, etc. Alternatively, it may appear as a handsome man or a beautiful woman, tempting humans. Upon entering the body of a living human being, such spirits can cause disease or mental illness. The spirits of the ancestors that are well fed and revered are believed to bring good luck. As opposed to them, neglected spirits without descendents will become wicked, causing drought, floods, and other disasters such as sickness and death, which is why it is important to take care of them.

Those who are executed or die as innocent victims will want to avenge their death in the world of the living. They will become invincible evil spirits who harass the living and bring bad luck down upon them. All those who have died prematurely, not living their life to its fullest, will become ghosts. These include soldiers killed in battle, victims of accidents, and suicides. Often they appear as breezes, but sometimes as horrible figures. In Chinese legend there is one character whose sole mission is to catch such ghosts and swallow them.

The ghosts and spirits have a special month of their own, starting on the last day of the 6^th lunar month. Chinese folk legends have it that during the 7^th lunar month the gate of hell is opened wide, enabling the spirits and ghosts to wander about freely until the end of the month. Families bring offerings to the dead – especially food, incense, candles and money of the next world, so that they will be able to spend it in the underworld. Both Daoists and Buddhists celebrate this event, and believe that during this period the spirits of the dead are redeemed. It is mostly the Chinese in Taiwan, Singapore, Malaysia, and Hong Kong who celebrate this holiday. However, in China itself it now seems to be making a comeback, though denounced by the government as a foolish superstition.

Two ceremonies, one on the 14^th day of the 7^th lunar month and the other, a day later, on the 15^th (full moon), are held for the dead spirits. The first is dedicated to the ancestors, and the second - to the hungry ghosts - the spirits of the dead who have no relatives, or who died far away from their families. On the 15^th day of the 7^th lunar month, a lantern celebration called the Hungry Ghosts Festival  – Zhong Yuan Jie 中(zhōng)元(yuán)節(jié)or Yu Lan Jie  孟(yu)蘭(lán)節(jié),   is celebrated. Lanterns shaped like lotus flowers are hung along the streets, and small lamps are floated on the rivers to direct these spirits to the food prepared for them. Otherwise, without their families to offer them sacrifice, they might become very hungry and seek the sacrifices given to other spirits.

When the Hungry Ghosts Festival begins, an altar and a chair are built for the Buddhist priests at the entrances to the streets and villages. In front of the chair is placed a sculpture of Di Zang 地(dì)藏(zàng) , the King of Hell. During the festival people customarily close their shops in order to leave the streets to the spirits of the dead. In the middle of every street is placed an altar with offerings of fresh fruit. The monks chant psalms understood only by the spirits.

The Hungry Ghosts Festival, which has been celebrated since the 6^th century, marked a period of renewal for the entire population in traditional China. Assemblies of monks held during this time of the year were characterized by vitality and a sense of revival. In medieval China emperors would celebrate the Hungry Ghosts Festival along with the common people, visiting the temples in the capital city to watch the celebrations.

The origin of the Hungry Ghosts Festival lies in a Buddhist story about Mu Lian目(mù)莲(lián), one of Buddha's disciples, who saved his mother's life. This disciple, who had gained magical powers, reaching a high level in knowledge of Buddhist doctrines, saw his mother in hell, with a huge stomach and small mouth, not able to swallow any food.  His mother, an unhappy woman who had performed not one good deed in her entire life, was sentenced to be a hungry spirit at the bottom of hell. Her son Mu Lian tried to feed her with rice, but it turned to ashes when it touched her lips. The worried Mu Lian addressed Buddha, begging him for help, but the latter answered that the mother had committed too many crimes during her lifetime, and suggested only that Mu Lian place many kinds of fruits and vegetables in the Yu Lan basins, as offerings to the Buddhist monks. And indeed, after doing these deeds, the mother's suffering was relieved. The generations to come have continued to bring fruits and vegetables as offerings to the monks, and the festival has become a memorial day for the ancestors.

Another traditional Chinese festival, held to drive away evil spirits, is the Dragon Boats Festival, celebrated on the 5^th day of the 5^th lunar month, the longest day in the year. From this day on the power of the sun begins to weaken, and the evil spirits rest and wait to act. Since in the summer diseases are more likely to spread, the Dragon Boats Festival is a good opportunity to drive away the evil spirits that cause them. Competitions take place among groups of boats, which are rowed to the sound of drums.

During the Dragon Boats Festival the Chinese would carry with them objects that are believed to drive away evil spirits, such as garlic, pomegranate leaves, bags of aromatic leaves and amulets. These would be attached to women's hair, put in pockets, hung on the buttons of clothing or attached to the clothing with a pin. On talismans, made of yellow paper, spells describing the five poisonous creatures[2] would be written. Today it is more customary for the children, who are believed to have weak spirits, to wear amulets and talismans. When they will grow up their spirits will be strong enough to fight off evil spirits and ghosts.

In traditional China the snake was believed to be able to transform into a man who tempts little girls and marries them, or a woman who tempts men. Lizards were fearsome because they were believed to crawl into uncovered vases containing salt or food, and poison their content. Another belief was that the tail of a lizard that separated from its body could enter the ear of a person and make him deaf. If the lizard would crawl onto a sleeping person, it would draw his brain out. Centipedes, scorpions and spiders were feared because of the danger of being stung by them. The toad, which is a nocturnal creature, was believed to possess an invisible arrow that could transfer malaria to humans and thus cause their death. 

In order to drive away the evil spirits and bite them, paper images of dogs would be thrown into the water. Demons and ghosts would be driven away by writing the character 王(wáng)(literally: king) in red on the forehead of children, because the form of this character resembles that of the wrinkles on a tiger's forehead. On the front door, calamus (common sweet flag) and moxa (mugwort) would be hung, and portraits of the god that protects against evil spirits would be displayed. Chickens, roosters, tigers, and their images too, were conceived of as able to drive away evil spirits.

When planning and founding a new settlement, the final decision would only be made after consulting feng shui 风(fēng)水(shuǐ) , in order to drive away evil spirits. The most ancient text that deals with the physical environment according to feng shui is a book about burial, from the 4^th century CE, although it discusses the location of graves rather than houses. However, the process of finding the best location for a grave basically resembles that of finding a location for a house.

For more than 2,000 years it has been customary in China to consult a feng shui expert when building a house or choosing a burial site. As early as 100 BCE, in the Book of Rites 礼(lǐ)记(jì), the rules for burial are written, stating that "the flow of energy dissipated by wind, stops at the boundary of water"; hence the term "feng shui" (literally: wind [and] water). Finding a location for houses, bridges, walls and tombs requires special attention. According to feng shui, all the houses in a street should be of the same height. The buildings in the front should not cast a shadow on those behind them.

The main characteristics of the desired environment include the presence of water in the front and mountains behind. On the left and on the right should be hills for protection. This is called rear yang and front yin. On the hills to the left can be found a green dragon, whereas on the hills to the right there is a white tiger. In the back are mountains covered with green trees, and in the front flows a winding river, behind which mountains rise. 

When a great river flows there is always a danger that the water will carry away with it the good powers and influences to outside the city. When the river flows toward a mountain, the mountain can block this from happening. In areas where there were no such mountains, pagodas were built to replace nature by means of architecture. Thus, harmony in the center was ensured.

One means to drive away evil spirits was that of a type of money called Yan Sheng produced by the government, and especially made for this purpose. As early as 2,000 years ago, such money was officially minted by the government but not circulated as ordinary currency. It was shaped in various designs, which reflected the customs, fashions, dreams and beliefs of the people, who would carry with them one such coin or wear a chain of them around the neck.

The word 鬼(guǐ), which usually represents a frightening demon, also signifies "ghost". Demons and ghosts are believed not to cast a shadow and to have weird voices. They are shortsighted and can see only a red glow. Humans see them as a dark cloud. There was a belief that mirrors could make the invisible ghosts visible.

In northern China people believed that the spirits of the dead dwelt on the mountains and, accordingly, sacrifices were offered there. In ancient times rice served both to expel evil spirits and as a sacrifice.

In order to prevent the entrance of evil spirits into the house it was customary to build a "shadow wall" behind the front entrance. This originated in the belief that evil spirits always move in straight lines and thus cannot go around the "shadow wall". Insertion of a nail into an object was sometimes a way to protect it against evil spirits. Among the evil spirits there are the black and hairy one-legged 山(shān)魈(xiāo) who live in the mountains. They are harmful but, like other evil spirits, firecrackers can defeat them. Spitting three times on demons prevents their metamorphosis. Spittoons were designed especially for this purpose.

Human-headed snake demons were believed to live in Guanxi 广(guǎng)西(xī) province. If one of these snakes called a human by his name, it would be better not to answer. Local stories recount that in Guanxi there were snakes so big that they could swallow even an elephant.

In order to drive away demons there are stones placed at street corners or in front of buildings, with the inscription "Stone dare take" 石(shí)敢(gǎn)当(dāng) , meaning that the stone dares stand as a guardian.  This stone is associated with the Tai mountain 泰(tài)山(shān)and with the belief that its rocks can drive away demons.

Alongside the desire to drive away demons, in traditional China there was also a desire to drive away death. The search for immortality occupied the thoughts of the Chinese much as it did in the West. Immortality drugs, concocted out of ingredients such as gold and sulfurous mercury, were poisonous.  The desire for immortality was so strong, however, that emperors were ready to try such potions. The Daoists were aware of the poisonous and deadly effect of the immortality potions that they prepared; and at least five of the 25 emperors of the Tang dynasty found their death on the way to immortality.