Most ancient Chinese were polytheists. Aside from Buddhism, introduced from India, and native Taoism, the common people worshiped and created many other gods, immortals and ghosts. To fulfill their desires and hopes for a good fortune, a bumper harvest, a chubby boy, an official promotion, or a peaceful and healthy family, the Chinese people and the rural population in particular created various deities to suit their liking.   

These hopes and desires were vividly expressed in a unique folk art form popularly known as zhi ma (paper joss, or paper-horse print). Paper joss was produced by carving the outline in relief of the god's image on a woodblock and then printing it in ink lines on colored paper. The prints were then burned as offerings and sacrifices. A historical study has shown that the paper joss was originally printed with the additional image of a horse on which the god was said to ascend to heaven. Therefore, from the Song Dynasty (960-1279 A.D.) on, paper joss was known primarily as paper horse.  

In cutting wood blocks, the image of the god was first traced in ink on a transparent paper which was then glued onto the woodblock. then the skilled craftsman cut the outlines of the image in relief along the traced lines. In printing, the woodblock was first evenly inked and then a sheet of fine paper was pressed on it. In order to print with high efficiency, craftsmen usually fixed fifty to one hundred sheets of paper in a position and turned and printed one after another. When colors such as red and green were required, the artisan applied them with a brush directly onto the print. Because the gods the people worshiped belonged to heaven and earth, they were not to be kept at home for a long time. However, the family gods, i.e., the kitchen God and the Door God, were changed once a year or at longer intervals and so were printed exquisitely.

Source: http://www.chinavista.com/experience/joss/joss.html