At the time Buddhism was introduced into China, Taoism was being established simultaneously and, when looking at the beginning, it can be somewhat difficult to tell the difference between the two. Confucianism enjoyed supremacy for over a hundred years and the movement to make him a god had already died out. Emperor Ming (58 - 75 CE) of the Eastern Han dynasty said of his brother, Liu Ying, the Prince of Chu, that he "reads the subtle words of Huangdi and Laozi [Taoist thought], while upholding humane sacrifice to the Buddha." According to one scholar, "this message tells us that the text Liu Ying read was a Taoist scripture (the original literature of Taoism that comprised the ideas of both Taoism and the Immortality school) but that the sacrifice he performed was according to Buddhist practice".
When Buddhism first appeared in China, early sources state that the Buddha had similar powers to that of the Chinese immortals, in his longevity, changeability, and ability to fly. In the Buddhist Sutra in Forty-two Sections, which was translated during the Eastern Han Dynasty and has similarities in Taoist texts, it teaches people to purify their minds and reduce their desires (qingxin guayu). Thus, in the beginning, people could hardly tell the differences between Buddhism and Taoism.
Chinese Buddhism was very different to that of the Buddhism that emerged from India. The form of Buddhism in India did not revere the Buddha as a deity whereas the Chinese did. In India, the Buddhist teaching was to prove the transitoriness or emptiness of the 'self', although the Mahayana school of Buddhism which was developed later regarded Buddha as a deity but still insisted that everything was transient or empty.
Buddhism became more and more popular throughout China but it did meet some resistance. As it spread, Buddhism constantly confronted resistance and attempts at reform from Chinese traditional culture. Chinese culture practiced filial piety and the Buddhist practice of chujia (leaving the family), forsaking parents, wife, and sons, was criticized as not being filial. During the Eastern Han period, Mouzi wrote an essay entitled "Mouzi on the Settling of Doubts" (Mouzi li huo lun), in which he responded to the people's disapproval of Buddhism and attempted to defend Buddhism as best as he could. In response to the people's criticism of chujia, he stated that the mercy of the Buddha "could keep the country of the person's father from disasters, thus ensuring good fortune, and also that the Buddha could "release the soul" of the person's parents and brothers from suffering"; on these grounds, therefore, Buddhism could not be considered as not being filial.
Temples were built to the Buddha, whose Chinese name was Neng-jen, which can be translated as 'ability to be good'. The temples were known as jen- tz'u, meaning 'Temples of goodness'. The Chinese people worshipped three Buddhas, or one Buddha in Three Bodies or three aspects. The most popular Buddhist deity worshipped in China was that of Avalokitesvarao or Kuan-yin who became a more human-figure. During the Tang Dynasty, he became a woman, or Goddess of Mercy, 'mother' to millions of devotees.
During the period of the Eastern Han and the Three Kingdoms era, there was a significant increase in the number of Buddhist scripts being translated into Chinese. These scripts can be placed into two different categories; one was the dhyana practice, the other being the prajna theory of Mahayana. The dhyana practice of Hinayana emphasized calmness of mind (samadhi), expulsion of all distracting thoughts, and thinking and imagining only in accordance with Buddhist doctrine in order to acquire personal experience of the power of the Buddha. The prajna theory of Mahayana can be translated as 'wisdom' but instead of being concerned with 'ordinary' wisdom, it focuses on the wisdom of non-wisdom that negates ordinary wisdom. Through special wisdom like prajna, "people can realize Sunya and cross to the yonder shore of salvation".
It was during the Tang Dynasty, however, that saw Buddhism as 'an empire within the empire' and in 845 CE, Buddhism was persecuted. At this time there were several different Buddhist schools and only the Chan and Pure Land schools remained strong. The Pure Land school of Buddhism can be traced back to the very beginnings of Buddhism in China; when it first appeared, it merged with the Yellow Emperor - Lao Tzu cult, which was dedicated to the search for man's everlasting life on earth. In 65 CE, the Buddha was worshipped in a temple in the palace with Lao Tzu for 100 years, as he was connected with the Yellow Emperor and Lao Tzu with the search for man's everlasting life on earth.
In more recent years, there was an attempt by the Marxist government of Mao Zedong to subdue Buddhism and other religions in China. Since 1978, however Buddhism has begun to see a revival in the number of believers.
Chan, Wing-Tsit (1957-1958) Transformation of Buddhism in China, Philosophy East and West, University of Hawai'i Press.
Liu, Jiahe & Shao, Dongfang (1992) Early Buddhism and Taoism in China (A.D. 65 - 420), Buddhist-Christian Studies, University of Hawai'i Press.