The Chinese believe that in this month ghosts and spirits, including those of the deceased ancestors, come out from the lower world to visit earth. Some of the activities include preparing ritualistic offering food, and burning hell money and bags containing cloth to please the visiting ghosts and spirits of the ancestors. Chinese Opera and Puppet Shows are put together for audiences - both living and non-living alike, at certain suburban areas prior to the big day
The Ghost Festival shares some similarities with the predominantly Mexican observance of El Día de los Muertos. Due to the theme of ghosts and spirits, the festival is sometimes also known as the Chinese Halloween.
The following is a legend on how the festival came to be:
A long time ago there lived a young man, Mu Lian and his widowed mother. His mother was a very wicked woman and she liked to laugh at the poor and their dirty clothes. She often turned away those beggars who came to her door asking for donation or food. The only person she cared was herself......
Mu Lian on the other hand was a kind soul. He was a gentle person and always willing to help anybody in need. One day he decided to become a monk and this did not please his mother. She scowled at him for being such a useless son; she wanted him to go out and work to earn more money for her. Wealth and materialistic things meant more to her than anything else.
When she saw that she could not dissuade her son, a plan began to hatch in her mind. She decided to play a trick on the monks just to get back at them for taking away her son. Mu Lian's mother thought it was silly that these monks did not eat meat. One day she got her chance and offered food to some monks and slipped in some non-vegetarian food without them knowing it.
When the wicked woman died, her soul was sent to 18th level of hell, the very bottom of hell, to be punished. All souls who are punished to the 18th level of hell will become hungry ghosts which mean they will have no chance of reborn on earth.
Mu Lian wanted to save his mother's soul because he knew her soul was suffering. He set out and ventured deep into the bowels of hell. Soon he came upon his mother and he saw that she was sitting a bed of very sharp pointy stakes and was holding on to a basin of blood.
Mu Lian tried feeding her some food but the food would either turn into fire or blood. It was hopeless: he couldn't do anything for her so he left. He returned home and started to pray.
It is said that Buddha heard Mu Lian's prayers and was touched by Mu Lian's compassion. Thus Buddha decreed that once a year, the gates of hell be opened so that the lost souls will be able to roam the earth and be fed. This is why every year on the seventh day of the seventh month in the lunar calendar, the Chinese celebrate the festival of the hungry ghost.