This book challenges the long-prevailing interpretation of China’s legal tradition as “virtue given priority over penalty,” arguing that this proposition is a projection of modern Western rule-of-law discourse and fails to accurately reveal the structure of traditional Chinese legal thought. The author introduces the concept of “virtue as foundation, penalty as function”—framing “virtue” as the bedrock of ruling legitimacy, moral education, and social self-governance, while “penalty” serves as a necessary tool for upholding order. It offers a novel theoretical framework for scholars and interested readers worldwide to re-examine China’s legal heritage and its embedded governance wisdom.