There was a gentleman of Zhejiang Province by the name of Ning Caichen, an open, generous person by nature, forthright and serious in his dealings. He always said that he had only ever loved one woman.

Once he passed through Jinhua on his travels and rested for a while at a temple in the northern outskirts of the city. The temple had once been rather grand, but now it was overgrown with weeds and seemed quite deserted. The doors leading into the monks’ cells in the east and west wings stood ajar, and the only place that showed any sign of being inhabited was a single room on the south side, which, Ning observed, had been fitted with a new door-bar and lock. In the eastern corner of the main courtyard, below the main hall of worship, grew a stand of large bamboos, their stems two hands round, and below the steps leading up to the terrace stretched a vast pond, covered with a mass of water-lilies in full bloom. Ning was greatly taken with the quiet, rarefied charm of the place.

It was the time of one of the Provincial Education Commissioner's periodic visits, and since as a result accommodation in the town itself had become very expensive, Ning considered taking lodgings in the temple. He went for a stroll to await the return of the monks, if there were any.

Towards evening, seeing a gentleman arrive and open the newly fitted door on the south side of the main courtyard, Ning hastened to pay his respects and to announce his intention of staying.

‘There is no one in charge here,’ replied the gentleman. ‘I too am only lodging here temporarily. If you think you might enjoy this lonely spot, I should be delighted to share it with you, sir.’

Ning was pleased at the man's friendly response. He made himself a pallet of straw and fashioned a little table out of wooden boards, clearly intending to stay for some time. That night the moon flooded the temple courtyard with its brilliant light, and the two men sat together in the portico of the main hall, conversing and becoming acquainted with each other. The gentleman introduced himself as Yan Chixia, and at first, even though he did not speak like a Zhejiang man, Ning imagined him to be a scholar up in town for the provincial examination. In due course Yan told Ning that he hailed from the western region of Qin. His way of talking seemed unusually blunt and unaffected. After chatting for a while, the two men bade each other goodnight with a bow and retired to bed.

It was Ning's first night in the temple, and he found it hard to fall asleep. He thought he could hear low voices outside, as if the members of a family were talking among themselves. Rising from his bed, he crouched against the northern wall of his cell, beneath the stone window-frame, and, peeping out, saw a small courtyard surrounded by a low wall, in which two women – one in her forties, the other an old lady in a faded red dress, with a long silver comb in her hair, humpbacked and unsteady on her feet – were talking in the moonlight.

‘What has kept Little Beauty so long?’ asked the younger of the two.

‘She should be here any minute,’ said the older.

‘Has she been complaining to you, Granny?’

‘No. But she does seem rather miserable.’

‘Perhaps we are being too soft with her.’

Even as they were talking, a young girl of seventeen or eighteen, of an extraordinary personal beauty, entered the courtyard and the old lady laughed.

‘One should never speak of people behind their backs! There we were talking about you, dear, when you come stealing in, silent as a little fairy. It's a good thing we weren’t discussing your shortcomings.’

After a brief pause she continued, ‘Why, you’re looking pretty as a picture today! If I were a young man, I’d be head over heels in love with you!’

‘And if I didn’t have you to flatter me, Granny,’ said the girl, ‘I’m sure I’d starve for compliments…’

She and the middle-aged woman then exchanged a few words. Ning concluded to himself that they must be a family living next door, and went back to bed. He heard no further words spoken outside, and soon all was silent.

He began to feel drowsy, but even as he was drifting off he became aware of someone coming into the room. He rose promptly from his bed and, peering into the gloom, to his astonishment recognized the girl from the courtyard outside. He asked her what it was she wanted, and she smiled.

‘It is such a bright night and I couldn’t get to sleep. I want to make love with you.’

‘You really shouldn’t say things like that!’ replied Ning sternly. ‘You must beware of what people might say. Gossip can be a terrible thing. A single false step can be a person's ruin.’

‘It's the middle of the night, no one need ever know.’

Ning rebuked her again, but still she lingered, as if she had more to say, and finally he ordered her brusquely to leave.

‘Go, or I shall call for the gentleman lodging in the south wing!’

This threat seemed to put the wind up her and she left. But just as she was walking out through the door, she turned back and placed a lump of gold on his quilt. Ning took the gold and threw it out on to the terrace.

‘I will not be contaminated by evil stuff like this!’

The girl retrieved the gold and went away, looking greatly mortified and muttering to herself, ‘That man has a heart of stone.’

The next day, a man from the nearby town of Lanxi, who was up in Jinhua for the examinations, came to lodge in the east wing of the temple. In the middle of the night, his servant found him dead, with blood dribbling from a small wound in the sole of his foot. The wound resembled a hole made by an awl. There seemed no obvious explanation for his sudden death. And then the very next night, his servant died in exactly the same manner. The following evening, when his fellow-lodger Yan returned to the temple, Ning mentioned the two deaths and Yan commented that they seemed to him to be the work of evil spirits. Ning had always been a man of firm convictions and was not unduly disturbed by such strange goings-on.

That night, the girl came to visit him again.

‘I’ve seen many men in my time,’ she said, ‘but never one as strong and unshakeable as you. You seem a saintly sort of person, and I can’t bring myself to lie to you any longer – I must tell you the truth about myself. My family name is Nie, and I have always been known as Little Beauty. I died when I was eighteen years old, and they buried my body just outside this temple. Then an evil spirit took control of me, and ever since he has been forcing me against my will to cast spells on men, to seduce them and do all sorts of shameful things with them. Now there is no one left in the temple to kill apart from you, and I am afraid that the spirit will come looking for you. He will take the form of a yaksha-demon.’

Brave though he was, Ning found this prospect somewhat daunting. He asked her what precautions he should take.

‘You must sleep in Mr Yan's room,’ she replied. ‘You will be safe there.’

‘Why is he so special?’

‘He is a strange one. Spirits don’t dare go near him.’

‘Tell me something,’ he said. ‘Tell me how you set about bewitching men.’

‘I do it in one of two ways,’ she replied. ‘Either a man agrees to make love to me, in which case I secretly prick him in the foot with an awl so that he falls unconscious and his blood can be drawn off for the evil spirit to drink. Or else I tempt him with a piece of gold, which is really not gold at all but the spirit-bone of a raksha-demon. Once he has taken the gold, I can use it to cut out his heart and liver. I use whichever method seems most likely to work at the time.’

Ning thanked her for confiding in him like this, and asked her at which times he should be specially on his guard, to which she replied that the following night would be a dangerous one for him. As she left him she wept. ‘I am sinking into a dark sea and cannot reach the further shore! But you are so strong! You are so bright and good, I know you can put an end to my pain. Take my bones back home with you, I beg you, and give them a decent burial. Set them at peace and bring me back to life!’

Ning gallantly agreed to her request and asked where he was to find her grave.

‘At the foot of the white poplar tree, in which a crow has made its nest.’

With these words she went out through the door and vanished into the night.

Early the following day, afraid that Yan might decide to leave the temple, Ning invited him over, and later that morning set food and drink before him, anxious not to let him out of his sight. He broached the subject of spending the night with him in his cell, and at first Yan refused, saying that he was a creature of habit and much too accustomed to sleeping alone. In the end, Ning was so persistent (going so far as to carry his own bedding over to Yan's room) that Yan felt obliged to comply with his request, and made room for him.

‘You are a true gentleman,’ he said, with some vehemence. ‘And I admire your courage greatly. But I have a secret that I cannot for the present divulge even to you. My secret is contained within this box of mine. I beg you not to pry. If you do, both of us will suffer the consequences.’ Ning gave his word.

Yan placed the box to which he had been referring on the window-sill, and the minute his head touched his pillow he fell fast asleep and began snoring like thunder. Ning, by contrast, was unable to get to sleep at all. Around midnight he caught sight of a dim form outside, stealing up to the window, then a pair of blazing eyes peering into the room. Terrified, he was about to waken his room-mate, when a small bright object burst out of Yan's box and flew up into the air, cutting through the darkness like a strip of dazzling white silk, splitting in two the stone lintel above the window before flashing back into the box, swift as a bolt of lightning. By now, Yan was awake and on his feet, and Ning, pretending to be asleep, watched as he picked up the box and inspected it, then took something from it and held it up in the moonlight, smelling it and examining it with great care. The object was about two inches long and the width of a spring onion leaf. It shone with a crystalline white light. Yan wrapped it carefully in several layers of cloth and replaced it in the box, which was now broken.

‘The brazen demon!’ he muttered to himself, as he returned to his bed. ‘To ruin my box like that!’

Ning, marvelling at the extraordinary event he had just witnessed, now rose from his bed and described to Yan all that he had seen.

‘Since we have become close friends,’ said Yan, ‘I cannot keep the truth from you any longer. I am a swordsman with certain unusual powers. If it had not been for that stone lintel, the evil spirit would be dead by now. As it is, he is certainly wounded.’

‘What was it that you were wrapping up just now?’

‘A sword. I could smell the monster's evil aura on it.’

Ning expressed a wish to see this magic weapon, and Yan generously agreed to show it to him. Ning gazed in wonder at the dazzling little miniature sword, and from that moment on held his fellow-lodger in great awe.

The next day, he looked outside the window and saw traces of blood. He left the temple precinct and walked towards the north, where he saw rows of abandoned graves and above one of them a white poplar tree with a crow nesting in its topmost branches. Having concluded his business in Jinhua, he packed his bags in readiness to return home. Yan gave him a farewell banquet, at which he spoke warmly of their friendship and presented Ning with a scuffed old leather bag.

‘This is a magical leather bag of mine. It was once used as a scabbard. Treasure it. It will ward off evil spirits.’

Ning expressed a desire to learn some of Yan's magical arts.

‘You certainly have the virtue and the strength of character for such things,’ said Yan. ‘But you are a man destined for a great future in the world, not a man of the Tao like myself.’

Under the pretence that he was exhuming a younger sister of his who had been buried nearby, Ning dug up Little Beauty's bones, wrapped them in grave-clothes and hired a boat for the journey home.

His family house was surrounded by fields, and he was able to dig a new grave and bury the bones just outside his studio. There he made a ritual offering and recited a prayer: ‘In pity for your lonely spirit, I have buried you near my humble abode. Now I shall be able to hear your singing and weeping, and you will hear mine, and no demons can ever come to harm you again. This libation of mine is a poor one, but I pray that you will deign to accept it.’

He was making his way back to his studio, when a voice hailed him.

‘Slowly! Let us walk together.’

He turned to look, and it was Little Beauty. She thanked him joyfully for what he had done.

‘Ten deaths would not be enough to repay you for this kindness! Let me go in with you and show my respect to your parents. I would gladly serve them, even as a maid.’

Ning looked closely at her. Her complexion shimmered like a sunset cloud, her feet were as dainty as tiny upturned bamboo-shoots: he found her even more strikingly beautiful in the daylight than she had been at night. He led her to his studio and bid her stay there while he went in to speak to his mother. The old lady was appalled at what he had to say, the more so since Ning's wife had been ill a long time. She ordered him not to breathe a word of this ghost encounter to his wife, for fear the shock might be fatal.

Even as they were talking, Little Beauty flitted into the room and prostrated herself before the lady of the house.

‘This is Little Beauty,’ said Ning.

At first his mother was too shocked to do anything but stare. The girl spoke first: ‘Madam, I am a wandering soul far from parents or family. I dearly wish to repay your son's great compassion towards me, by serving him faithfully.’

Ning's mother had to admit to herself that she was very charming.

‘I am indeed delighted,’ she replied at last, ‘that you should be so attached to Ning. But he is my only son, the sole hope of our family. The continuation of our ancestral sacrifices depends on him. I cannot possibly have him marrying a ghost!’

‘Truly I wish him no harm,’ replied the girl. ‘If you do not trust me, because I am a spirit from the Nether World, then let me serve him as a sister. That would also allow me to wait upon you, morning and evening, as a daughter.’

Ning's mother was moved by her obvious sincerity, and agreed to this unusual arrangement. Little Beauty also expressed a wish to call upon Ning's wife, but Ning's mother absolutely forbade this, on account of the wife's poor health. Little Beauty took herself off to the kitchen and supervised the cooking in the old lady's stead, seeming to know her way around every room of the house as if it were her own home.

At nightfall, Ning's mother began to feel afraid and sent Little Beauty off to sleep ‘somewhere else’, pointedly not preparing a bed for her. Little Beauty understood her meaning and went outside, making her way to the threshold of Ning's studio, where she stepped back and seemed to hesitate, as if afraid of something. Ning called out to her from inside, and she replied, ‘There is something frightening in your room. I sense the aura of a sword. You were carrying it on your journey here. That's why I could not accompany you.’

Ning knew it must be the leather bag, and he took it down and hung it in another room. Now Little Beauty was able to enter the studio and sit down with him in the lamplight. For a while she said nothing, then at last she asked him, ‘Do you ever study at night? When I was younger I used to be able to recite the Surangama Sutra, though I’ve forgotten a lot of it by now. If you could find a copy for me, I could recite it in the evenings and you could correct me.’

Ning was pleased with this idea. They sat silently together for some time, until the second watch of the night was almost ended. Still Little Beauty made no mention of leaving, and when Ning finally urged her to go, she spoke to him sadly: ‘A lonely soul in a strange land dreads the desolation of the grave.’

‘I have no second bed here,’ said Ning. ‘And we should observe decorum, as brother and sister.’

She rose, a slight frown on her face as if she might weep at any moment, and, moving slowly and fearfully, glided out of the door and on to the terrace, where she vanished from sight. In his heart Ning felt sorry for her, and would have let her stay and sleep in a separate bed, but was afraid of incurring his mother's displeasure.

Little Beauty waited on his mother morning and evening, bringing water for her to wash with, busying herself with household chores, trying to please her in every way she could. When dusk fell, she always took her leave and made her way to the studio, where she would sit in the lamplight chanting the sutra until she could sense that Ning wanted to go to sleep, when she would leave him, always with the same sad expression on her face.

Now, Ning's wife had been ill of a consumption for a long while and his mother had, as a consequence, been weighed down with household work. Having Little Beauty to help took a great load off her, and with the passage of time she grew fond of her and gradually came to think of her as her own daughter. She ceased to regard her as a ghost. She no longer chased her out of the house at night, but insisted that she should stay and sleep with her in her own room. At first Little Beauty ate and drank nothing, but after six months had passed, she gradually began to take a little thin congee. Little by little, mother and son became extremely attached to her, and they would never have it mentioned in the house that she was a ghost. Indeed, strangers were unable to distinguish anything ghostly about her.

After a considerable interval of time, Ning's wife died. His mother now considered marrying her son to Little Beauty, but was still concerned that this might bring him harm. Little Beauty knew what was on her mind and spoke to her at an opportune moment.

‘I have been here in your home for over a year now, so I think you know my true nature. I followed your son here because I wanted to put an end to my own evil-doing – I had nothing else in mind. Your son is a man of such shining virtue, admired by gods and men. All I want is to stay with him and help him for three years. When he achieves some noble rank, perhaps I too can win a little reflected honour in the Nether World.’

Ning's mother knew that she had no evil intent, but her concern was that such a wife might never be able to bear her son a proper child and continue the family line. Little Beauty tried to reassure her on this score.

‘Children are a predestined gift of Heaven. The Register of Destiny says that your son will have three sons, and that they will bring honour to his clan. This cannot be taken away from him simply because he has a spirit wife.’

The old lady believed her implicitly, and once she had discussed the match with her son (whose joy can be imagined), a wedding feast was held to which all the family members were invited. The guests naturally were agog to see the bride, and when she came into view, utterly poised and arrayed in her full bridal splendour, everyone in the hall was struck speechless with wonder. In their eyes she was a fairy, not a ghost, and from this time onwards Ning's relations contended with one another to give her presents and become her friend. Little Beauty turned out to be a talented painter of plum-blossom and orchids, and she gave them scrolls of her own painting in return, which the lucky recipients treasured.

One day, she was sitting by the window and seemed in an unusually melancholy mood. ‘Where is that leather bag of yours?’ she asked out of the blue.

‘You were so afraid of it,’ replied Ning, ‘so I wrapped it up and put it away.’

‘After all this time, I have absorbed a lot of your life force, so I am not afraid of it any more. Why not hang it up by our bed?’

Ning asked her what was really on her mind.

‘For three days now,’ she replied, ‘my heart has been greatly troubled. It is the wicked demon of Jinhua! I know he resents me for having fled from the temple, and I sense that one day very soon he will come and find me.’

Ning took out the leather bag and she examined it closely, turning it over in her hands.

‘This is where the magic swordsman used to put the heads of the men he killed! Look how old and worn it is! Who knows how many heads it has held in its time! It makes my flesh creep just to look at it!’

They hung the bag up in their room, and the next day moved it to outside their door. That night, Little Beauty warned Ning not to fall asleep and they sat together in the lamplight, waiting. Suddenly a creature dropped into the courtyard, like a bird alighting from the sky, and Little Beauty hid in terror behind the bed-curtains. Ning looked out: it was a little yaksha-demon, with blazing eyes and bloody tongue. It waved its claws menacingly in the air as it crawled towards the doorway, its eyes burning through the darkness. At the doorway it hesitated, went up to the leather bag and ripped at it with its claws. Suddenly a mighty noise erupted from the bag, which had meanwhile grown to the size of a huge basket of the sort used for moving earth, and something monstrous poked its head out and pulled the demon in. Then there was no sound, and the bag shrank back to its former size.

Ning stood there in open-mouthed astonishment, as Little Beauty came out from behind the bed-curtains.

‘We are saved!’ she cried happily.

They examined the bag together. All it contained was a quantity of colourless water.

Several years later, Ning succeeded at the doctoral examinations. Little Beauty bore him his first son, and then when he took a concubine, she and Little Beauty each gave him another son. In their lifetimes, all three sons became eminent mandarins.