There are several ways to categorise the different types of martial arts in China. There are northern styles, southern styles, animal styles Buddhist styles, Daoist styles, Muslim styles, Tibetan styles, Emei Mountain Styles, Wudang styles, Shaolin styles, internal styles, and external styles....

Any martial art might fit into more than one of these categories. And all share some kind of common history. (Martial arts thrive on innovation. So, there is always a lot of research and development going on, with styles mutually influencing each other over thousands of years.

One of the most commonly used stylistic designations is that which differentiates between internal styles and external styles.

The distinction is often defined by the way that external styles tend to emphasise physical development of the body, while internal styles tend to place a greater emphasis on the cultivation and circulation of qi. In fact this distinction is mostly a matter of degrees since all styles, both internal and external styles include qigong.

Some place the difference in the way external styles train the physical body and hard qigong first, and gradually move to softer and more subtle methods; while the internal styles train the subtle and internal first, leaving the physical techniques to later. It is often said: "External styles are from external to internal, while internal styles are from internal to external. The approaches differ. But the goal is the same."

Some judge internal and external styles by the way power is manifested. Internal styles generate power like a whip - transferring power through a relaxed and integrated body. External styles transmit power like club, adding momentum to each part of the body consecutively.

Sun Lutang identified the following as the criteria that distinguish an internal martial art:

1. An emphasis on the use of the mind to coordinate the leverage of the relaxed body as opposed to the use of brute strength.
2. The internal development, circulation, and expression of qì.
3. The application of Taoist dǎoyǐn, qìgōng, and nèigōng (內功) principles of external movement.

In the 1920s Sun Lutang identified three of the arts he was known for (taijiquan (tai chi), xingyiquan and baguazhang) as belonging to the “internal family” (neijia). Masters of Taijiquan, Xingyiquan, and Baguazhang collectively referred to their styles as the Internal School in reference to both the subtle nature of the advanced training, and to the fact that they practised elite skills that were not known to the common run-of-the-mill martial artist.

They did not realise at first that there was already a martial arts called Neijiaquan being taught at Wudang Mountain. By the time they discovered this, the damage had already been done. To this day people still mistakenly associate taijiquan, xingyiquan, and baguazhang with the Daoist arts of Wudang. This confusion is compounded by the fact that taijiquan, xingyiquan, and baguazhang are all currently practised at many Wudang schools, and that there is more than a little evidence that Wudang had a strong influence on the development of these styles.

Many other martial arts have since been referred to as internal styles based on their common approach to power generation and qi cultivation. Some of these martial arts, such as liuhebafa and yiquan are clearly related to the original three. But even styles such as aikido and kitoryu jujutsu, which developed in other countries, have been referred to as internal martial arts. The principles of internal martial arts can even be found in some of the esoteric native martial arts of the First Nations in Canada.

With the practical considerations of combat being so important to the ancient masters, all styles required the cultivation of power, speed, and technique. They also shared the need to protect vulnerable areas while maintaining offensive opportunities. Each of these requirements needed to be developed without compromising the others. One must not, for example develop speed at the expense of the proper alignment needed for power, and power must not interfere with the smooth changes needed to execute proper technique.

With all these common requirements, and the common weapon (the human body) it is not surprising that there are so many similarities between the different styles. Another unifying factor was the function of major learning centres such as Shaolin, Wudang, and Emei, where martial artists, warriors, healers, and clergy would often share knowledge and further develop their arts.

While there is not much documentary evidence to suggest the use of "qi" in martial arts before the Liang Dynasty (502-557 CE), it is suspected that it was understood in some manner, especially by the more isolated shamanistic styles. But like similar indigenous traditions known around the world, they would not have had the terminology or literacy to document it. There are passing references and artwork that hint at the development of exercises similar to the internal martial arts of today. But any claims to a direct lineage are speculative at best.