Kan and Li literally mean "water" and "fire." In Taoist alchemy, the meaning of each depends on the level of meditation you are doing. In the Kan and Li formulas, they generally refer, respectively, to the cold/watery/kidneys and hot/fiery/heart energies.

Through the practice 'Fusion of the Five Elements', the human being can reach back to the split into two, and experience the polarity between fire/yang and water/yin. At the start of the Kan and Li level, the fire is above and water is below.

 Since fire expresses the raising aspect of the CHI, and water its downward movement, their basic tendencies tear them apart from one another. In that situation, alchemy is   not possible. There has to be a reversal of their positions within the body: fire has to go down, while water has to go up, so that an alchemical transformation can occur.

On our return journey back to the Tao, there are many seemingly fixed patterns of reality that block our progress. As Taoists, we do not struggle or fight with these seemingly impassable obstacles within our body/mind-instead, we simply identify and acknowledge the polarities present, and dissolve them. This is a necessary step in our return through the five elements and yin-yang dialectics to the ''uncarved block", the undifferentiated whole, Wu Chi, the Tao.

The formula, called Siaow Kan Li ("yin and yang mixed") in Chinese, involves the literal steaming of the sexual energy (Ching) and its refinement into life-force energy (chi) in order to feed the soul or energy body. One might say that the transfer of the sexual energy power throughout the whole body and brain begins with the practice of Kan and Li. The crucial secret of this formula is to reverse the usual sites of Yin and Yang power, thereby providing liberation of the sexual energy. The formula consists of:

    1. Combining male and female or water (yin/muIti-orgasmic energy) and fire (yang/compassion fire from the heart), along with all the virtue energy from all the organs, to give birth to the soul.
    2. Transforming the sexual power in to vital energy (chi). Gathering and purifying the microcosmic outer alchemical agent.
    3. Opening the twelve major channels.
    4. Circulating the power in the Microcosmic Orbit.
    5. Turning back the flow of generative force to fortify the body and the brain and to restore them to their original condition before puberty.
    6. Regrowing the thymus and lymphatic system.
    7. Nourishing and rejuvenating the organs.
    8. Sublimation of the body and soul in self-intercourse.
    9. Giving birth to the immortal soul (energy body).

This formula includes the cultivation of the root (the Hui Yin) and the heart center and the transformation of sexual energy into pure CHI at the navel center (the first cauldron). This inversion places the heat of the bodily fire (the compassion fire from the heart center) beneath the coolness of the bodily water (sexual energy from the perineum). Unless this inversion takes place, the fire simply moves up and bums the body out. The water (sexual fluid) has the tendency to flow downward and out. This formula transmutes the squandering of energy by the highly advanced method of placing water in a closed vessel (the cauldron) in the body and then cooking the sexual energy with fire beneath. If the water is not sealed, it will flow directly into the fire and extinguish it or itself be consumed. That is why the cauldron is so important in the internal process of "steaming".

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