Why did imperial Chinese officials refer some disputes to clans and guilds for resolution?

In imperial China, officials frequently referred disputes to clans and guilds for resolution as part of an integrated legal system where formal state law and informal customary norms operated holistically.1

This practice served several administrative and social purposes:

• Facilitating Governance: By allowing these entities to handle internal matters, the state could maintain order pursuant to shared values while permitting necessary variations to suit local circumstances.1
• Procedural Flexibility: A permeable membrane existed between formal and informal processes. While these groups managed everyday disputes, they were aware that particularly troublesome cases could be escalated to local officialdom if they could not be resolved internally.1
• Alignment of Values: The informal norms enforced by clans and guilds typically mirrored the values embedded in the state’s legal code, ensuring that these private resolutions remained consistent with the broader moral and social order of the empire.1

Rather than indicating a disdain for legality, this system was an ingenious method of managing a vast population by leveraging existing social organizations to uphold the state's moral fabric.1