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This cosmological theory was developed by thinkers of all later schools. The concepts were used to correlate human actions with the actions of nature. This idea, in differing expressions, was used by both Confucian and Taoist philosophers during the Han Dynasty. The Confucians used it to develop political and ethical ideas while the Taoists concentrated on the direct relationship between individuals and nature. Both the public and the private areas of life were covered with these concepts. As it is the way of nature to process through periods of flourishing and decline so it is with human affairs. The patterns of nature are reflected in both the life of the individual and of the wider society.

There was one further area covered with these concepts, that of history. History was cyclic, as it was considered to be the counterpart in the human sphere of the cycles of the universe. It is this cyclic notion of the myriad things and the centrality of change that makes Chinese thinkers so different from those of other traditions. Unlike their Japanese, Jewish, or Christian counterparts, they did not assign a temporal beginning to the universe nor did they talk of the end of the universe. In the Yin-Yang/Five Elements theory, time itself is a series of cycles based upon the movement of the planets. For these thinkers, time extends indefinitely into the past and the future. As long as there is motion in the universe, there is time and thereby change. There is no idea of a creator, because there is no beginning and as long as the planets are in motion, there can be no end. These ideas are direct developments of the cosmological theory.

This interdependent interaction of Yin-Yang and Wu Hsing sustains everything. The concepts of Yin-Yang and Five Elements have a great influence in Chinese life, from the Emperor to the ordinary people, all are governed by these ideas of the relations between humans and nature. Yin-Yang nurture and produce the myriad things, the Five Elements describe their natural progression through their 'life'. All things have their natural state of activity, and are connected together by the ch'i of each of the myriad things. Thus humans and nature, heaven and earth, the individual and society are bound together in a harmonious relationship. The scholars concentrated on the metaphysical and cosmological aspects of these ideas, while the 'ordinary people' used them to give authority to the various forms of divination that developed over the years. These ideas permeate all areas of Chinese thought and action, and form the ground of Chinese culture and civilization for over two thousand years.

The essentials of the Yin-Yang school are as follows: the universe is run by a single principle, the Tao, or Great Ultimate. This principle is divided into two opposite principles, or two principles that oppose one another in their actions, yin and yang. All the opposites one perceives in the universe may 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 change 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 a universal explanatory principle. 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 may be related to one another in some way, for example, one can use the stars to determine what kind of policy to pursue in government.

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