The Ghost Festival is a traditional Chinese holiday celebrated on the 15th day of the seventh lunar month. A solemn holiday, the Ghost Festival represents the connections between the living and the dead, earth and heaven, body and soul.
The entire seventh month of the Chinese calendar is called the Ghost Month, a month in which ghosts and spirits are believed to emerge out from the lower world to visit earth. The Ghost Festival is the climax of a series of the Ghost Month celebrations.
Activities of the festival include preparing ritual offerings of food, and burning ghost money (or paper money) to please the visiting ghosts and spirits as well as deities and ancestors. Other activities include burying and releasing miniature paper boats and lanterns on water, which signifies "giving directions to the lost ghosts."
The Ghost Festival has roots in the Buddhist festival of Ullambana, and also some from the Taoist culture. In the Tang Dynasty, Ullambana and traditional festivities were mixed and celebrated on one day. Thus, the Ghost Festival has special meaning for all Buddhists as one of their most important festivals.
The Buddhist origins of the festival can be traced back to a story that originally came from India, but later took on culturally Chinese overtones. This story, "Mu-lien Saves His Mother from Hell," is an account of a well-to-do merchant who gives up his trade to become a devout follower of Buddhism.
After the merchant attains enlightenment, he thinks of his father and mother, and wonders what happens to them. He travels over the known Buddhist universe, and finds his father in heaven. However, his mother has been sent to hell, and has taken on the form of a hungry ghost--it cannot eat because its throat is very thin and no food can pass, yet it always hungers because it has such a large belly. His mother was greedy with the money he left her. He had instructed her to kindly host any Buddhist monks that ever came her way, but instead she withheld her kindness and her money. It was for this reason she was sent to hell. Mu-lien eventually saves her from this plight by battling various demons and entreating the help of the Buddha.
Buddhists instituted a day after the traditional summer retreat (the fifteenth day of the seventh month in the lunar calendar--usually mid-to-late August) as a day of prayer and offering in which monks can pray and make sacrifices on behalf of dead ancestors or hungry ghosts. The family members of the deceased essentially pay for this service, and thus their patronage is a form of charity. The deceased ancestors are pacified and hungry ghosts can eat (the sacrificial foods). The Mu-lien story ends with this festival and the rescue of his mother from hell. She ends up being reborn as a pet dog in a well-off household.