Nei Dan (literally "inner elixir") works with the three treasures (san bao) — the three fundamental energies or essences that constitute the human being at different levels of refinement:
Jing (Essence) is the most dense and most fundamental — the constitutional vitality inherited from parents and stored in the kidneys. It is the energetic foundation of physical existence, associated with reproduction, growth and the deepest reserves of vitality. In the alchemical process, Jing is the raw material — the lead that is to be transformed into gold.
Qi (Vital Force) is the intermediate level — the animating energy that circulates through the meridians, powers all physiological processes and connects the dense physical with the subtle mental. In the alchemical process, Jing is refined into Qi through specific practices — the base material is transformed into a subtler, more flexible form of energy.
Shen (Spirit/Consciousness) is the most refined — the luminous awareness that is the highest expression of the human being and the dimension that can participate most directly in the Tao. In the alchemical process, Qi is refined into Shen — the vital force is transformed into pure spiritual awareness. The final stage — Shen returning to the Void (Xu) — is the return to the Tao itself, the dissolution of the separate self in the infinite.