Early in the 3rd Century, China's mighty Han empire collapsed. From the wreckage emerged three kingdoms and competing warlords with an eye on the throne. Centuries later their struggle was turned into China's favourite warfare epic - a story that underlines the historical fragility of the empire, and still provides an object lesson in good management.

The Romance of the Three Kingdoms is for China roughly what Homer is for Europeans, a swashbuckling adventure story, with lots of blood, excitement and craftiness on the battlefield.

Chinese boys live and breathe the story, with its hundreds of characters in cloaks and long robes and multiple sub-plots, spanning a century of convulsion before the empire was reunited.

"It is a general truism of this world that anything long divided will surely unite, and anything long united will surely divide."

These are the opening words of the Romance of the Three Kingdoms. The action begins just as the Han empire is about to break up.

Image caption Liu Bei (top) met Guan Yu (r) and Zhang Fei (l) in a peach orchard

The government is struggling to suppress a rebellion by peasants called the Yellow Turbans. It is forced to do what it hates to do: outsource troop recruitment - and that gives an opportunist called Liu Bei his big break.

"He had fallen on hard times and he was making a living just selling straw sandals and mats," recounts Chinese rock musician Kaiser Kuo, who loved the stories of Liu Bei as a child.

"In the story he stands looking at the poster that's been put up calling for the brave men of the kingdom to rise up. And he sighs. And behind him there is a big burly guy by the name of Zhang Fei, a butcher, who chastises him for merely sighing and not actually doing something about it."

The two of them go off to have a drink in the tavern and come across a man with a red face, a very long beard and a green battle gown, Guan Yu. The three of them then swear an oath of eternal brotherhood in a peach orchard and set about trying to save the Han dynasty.

Our trio represent the south-west kingdom. They face, in the north kingdom, the cunning and ruthless Cao Cao, and in the south-east the vacillating and deceitful Sun Quan. A mindboggling amount of fighting and double-crossing follows.

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"This is the first time that an imperial collapse has happened with a power vacuum ensuing," explains Frances Wood, curator of the East Asia collection at the British Library.

"The Han had overthrown the Qin [dynasty]. That was a straightforward regime change, if you like. But at the end of the Han you get fragmentation.

"The major nightmare of all the Chinese at all times is that if there's no central power, then the country is going to split up and that's very much what was happening at this time. You get different generals in different parts of China setting up different regimes, and then fighting each other."

The Romance of the Three Kingdoms is a good corrective to the hypnotising story of harmony that Chinese rulers like to tell when they are in control and trying to stay there.

China is not a readily stable and harmonious country. In fact, governments need a powerful narrative of unity precisely because China has such a tendency to fall apart.

"Chinese history is not as clean-cut as written in textbooks," says archaeologist Wang Tao.

Romance of the Three Kingdoms Written by Luo Guanzhong in the 14th Century

The novel has 800,000 words and almost 1,000 characters

Retells the events surrounding the demise of the Han dynasty

It echoes Confucian values that were popular at the time

"It's full of fighting. And I remember looking at some archaeological sites and you see so many remains - weapons, headless bodies. There is actually a lot of blood in history, which of course now we don't normally see in textbooks."

The Confucian code insists that the superior man achieves his goals without resort to force. Liu Bei and his enemies were certainly ready to use intelligence, diplomacy and downright lying if it got them what they wanted. After all, they had no shortage of military classics like Sun Tzu's Art of War.

"A leader leads by example not by force," he wrote, several centuries earlier. "To know your enemy, you must become your enemy. Opportunities multiply as they are seized. Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win. Build your opponent a golden bridge to retreat across. All warfare is based on deception."

Warriors in trousers Verity Wilson, expert on the history of Chinese textiles and clothing: If we look back at pottery figures, at stone relief carvings, we see that in fact trousers were fashionable, or at least practical, for men in Liu Bei's time. Liu Bei would have worn trousers, a sort of skirt-like scarf around his waist, a sleeveless jacket and armour over his chest, of course. Like all Chinese men at the time, he would wear his hair long, curled up in a bun at the top, and fastened with wonderful trailing silk scarves and sometimes just bound with a jade band. He was rather an impressive figure, and I think that some of the depictions of him today probably are not far off what he really looked like.

There is no shortage of deceptions in the Romance of the Three Kingdoms.

The film Red Cliff by director John Woo, the most expensive ever made in China, retells the story of a battle on the Yangtze river, as Cao Cao's navy is moored on one bank while Liu Bei and his accomplices are plotting on the other.

"It's very much just about warfare but also cunning strategy. There are wily generals who do very clever things," says Frances Wood.

"If they run out of arrows, they send a boat down the river past the enemy camp, and the enemy thinks, 'Goodness me what is this?' and they fire a million arrows into the side of the boat. And they capture them in straw, and so that's how you get spare arrows.

"So it's full of stories that are not just about slaying or taking territory, but also about being clever, and outwitting your enemy."

It is deception not force of numbers that wins the battle of Red Cliff. But there is more scheming to come from Liu Bei and friends.

"Knowing that the enemy has a spy in their camp, they publicly beat and humiliate one of the most important generals so that this is reported back and his defection then looks completely authentic," explains Kaiser Kuo.

Consequently, when Cao Cao's army sees the defector's ship heading toward them, they do not do anything about it. They are expecting him.

"In fact his ship is laden with flammable materials and he sets it on fire and manages to set a good part of the enemy fleet afire. They say that the Red Cliffs, the cliffs that give their name to both the famous battle and the John Woo movie are still charred black to this day because of smoke from the burning fleet."

Two thousand years on, the Romance of the Three Kingdoms is not just a scorch mark and an escapist adventure story.

Kaiser Kuo says he was once introduced to the Chinese-American founder of a Silicon Valley computing firm, who was born and raised with these stories and saw them as directly relevant to the company's business.

"He had his senior management team meet every Monday morning to discuss a chapter of Three Kingdoms," says Kuo.

"The real story is about how to deploy people of talent. It's really all about management and when I read these stories today, I still find just tremendous relevance."

So if you are trying to understand how China works, do not just rely on pieties from the party leadership. Read the Romance of the Three Kingdoms and start looking out for the Liu Beis and the Cao Caos in real life.