The Story of the Third Light
On a farm in the Chinese Empire, master magician A Hi receives a letter from the Emperor, requesting him to perform magic tricks at his birthday party. He warns, however, that should A Hi bore him, he will be beheaded.
Using his jade wand, A Hi flies a carpet to the Emperor's palace, with his two assistants, Tiao Tsien and Liang, in tow. Performing for the Emperor, A Hi creates a miniature army. The Emperor is impressed, but wants his female assistant, Tiao Tsien as his gift. A Hi offers him a magic horse instead. Again, the Emperor is impressed, but orders A Hi to hand over his assistant. Liang, Tiao Tsien's lover, attempts to escape with her, but is captured, while she is taken to the Emperor's private quarters. When the Emperor tries to sleep with her, she quickly rejects him.
Obsessed with having Tiao Tsien's affections, the Emperor turns to A Hi, and orders him to make her submit. When A Hi confronts his assistant, she takes his wand, accidentally cracking it. Using the wand, she turns A Hi into a cactus, and several guards into pigs. She notices that the more she uses the wand, the more it degrades. Spawning an elephant, Tiao Tsien breaks Liang out of his cell, and they escape the palace together. The Emperor calls upon his archer to kill them.
When the Emperor's archer confronts the assistants, he kills Liang, but spares Tiao Tsien. Death appears to claim Liang's soul, and the last of the three candles burns out.