The commonly accepted theory, developed by Harold James Ruthven Murray, author of A History of Chess, is that games from the chess family originated in India. From there, they spread to the rest of the world, and one offshoot evolved into modern xiangqi in China, possibly influenced by other games already played there.
References to a game called xiangqi date back to the Warring States period; according to the first century BC text Shuo yuan (說宛), it was one of Lord Mengchang of Qi's interests. Emperor Wu of Northern Zhou wrote a book in AD 569 called Xiang Jing. It is believed to have described the rules of an astronomically themed game called xiangqi or xiangxi (象戲). The word xiàngqí 象棋 is usually translated as "elephant game" or "figure game", because the Chinese character 象 means "elephant" and "figure"; it originated as a stylized drawing of an elephant, and was used to write a word meaning "figure", likely because the two words were pronounced the same. But the name can also mean "constellation game", and sometimes the xiàngqí board's "river" is called the "heavenly river", which may mean the Milky Way.
For these reasons, Murray theorized that "in China took over the board and name of a game called 象棋 in the sense of 'Astronomical Game', which represented the apparent movements of naked-eye-visible astronomical objects in the night sky, and that the earliest Chinese references to 象棋 meant the Astronomical Game and not Chinese chess". Previous games called xiàngqí may have been based on the movements of sky objects. However, the connection between 象 and astronomy is marginal, and arose from constellations being called "figures" in astronomical contexts where other meanings of "figure" were less likely; this usage may have led some ancient Chinese authors to theorize that the game 象棋 started as a simulation of astronomy.
To support his argument, Murray quoted an old Chinese source that says that in the older xiangqi (which modern xiangqi may have taken some of its rules from) the game pieces could be shuffled, which does not happen in the modern chess-style xiangqi. Murray also wrote that in ancient China there was more than one game called xiangqi.
An alternative hypothesis to Murray's is that xiangqi was patterned after the array of troops in the Warring States era. David H. Li, for example, argues that the game was developed by Han Xin in the winter of 204 BC-203 BC to prepare for an upcoming battle. His theories have been questioned by other chess researchers, however. The earliest description of the game's rules appears in the story "Cen Shun" (岑順) in the collection Xuanguai lu (玄怪錄), written in the middle part of the Tang dynasty.
With the economic and cultural development during the Qing Dynasty, xiangqi entered a new stage. Many different schools of circles and players came into prominence. With the popularization of xiangqi, many books and manuals on the techniques of playing the game were published. They played an important role in popularizing xiangqi and improving the techniques of play in modern times. A Western-style Encyclopedia of Chinese Chess Openings was written in 2004.
Source: Wikipedia