The essentials of the yin-yang school are as follows: a single principle, the Tao, or Great Ultimate runs the universe. This principle is divided into two opposite principles, or two principles, which oppose one another in their actions, yin and yang. All the opposites one perceives in the universe can be reduced to one of the opposite forces. The yin and yang accomplish changes in the universe through the five material agents, or wu hsing, which both produce one another and overcome one another. All changes in the universe can be explained by the workings of yin and yang and the progress of the five material agents as they either produce one another or overcome one another. Yin-yang and the five agents are universal explanatory principles.

All phenomena can be understood using yin-yang and the five agents: the movements of the stars, the workings of the body, the nature of foods, the qualities of music, the ethical qualities of humans, the progress of time, the operations of government, and even the nature of historical change. All things follow this order so that all things can be related to one another in some way: one can use the stars to determine what kind of policy to pursue in government, for instance.

The yin and yang represent all the opposite principles one finds in the universe. Under yang are the principles of maleness, the sun, creation, heat, light, Heaven, dominance, and so on, and under yin are the principles of femaleness, the moon, completion, cold, darkness, material forms, submission, and so on. Each of these opposites produce the other: Heaven creates the ideas of things under yang, the earth produces their material forms under yin, and vice versa; creation occurs under the principle of yang, the completion of the created thing occurs under yin, and vice versa, and so on.

This production of yin from yang and yang from yin occurs cyclically and constantly, so that no one principle continually dominates the other or determines the other. All opposites that one experiences—health and sickness, wealth and poverty, power and submission—can be explained in reference to the temporary dominance of one principle over the other. Since no one principle dominates eternally, that means that all conditions are subject to change into their opposites.

This cyclical nature of yin and yang, the opposing forces of change in the universe, mean several things. First all phenomena change into their opposites in an eternal cycle of reversal. Second, since the one principle produces the other, all phenomena have within them the seeds of their opposite state, that is, sickness has the seeds of health, health contains the seeds of sickness, wealth contains the seeds of poverty, etc. Third, even though an opposite may not be seen to be present, since one principle produces the other, no phenomenon is completely devoid of its opposite state. One is never really healthy since health contains the principle of its opposite, sickness. This is called "presence in absence". Once you have this principle down, the particular Chinese view as expressed in literature, art, and history will become immediately evident.