The modern languages of
China, of which the most familiar are
Mandarin and
Cantonese, are for the most part descendants of the language spoken in the
Tang Dynasty, starting around 600. It was from about this time that the modern languages (often but wrongly termed
dialects) diverged. The Tang Dynasty was the height of Chinese literary civilization, and their language is known as
Classical Chinese.
The distinctive Chinese writing system seems to have developed sometime between 2000 and 1500 BCE; there is no significant evidence that it was influenced by earlier writing from the Middle East. It did change quite a bit over its history, before settling on the "modern" forms: actually around 200 BCE, with the creation of the xiao zhuan ("small seal") script, preeminently by the scholar Li Si.
Some signs were actually incomprehensible or were given fanciful reinterpretations, or abandoned altogether and replaced. In the modern system it is very difficult to see pictures in many of the signs, and this was also the situation back then. A major commentator on the reasoning behind the new script was Xu Shen in his book Shuo Wen, around the year 100.
Chinese script developed from pictographs: each character represented not a sound but a word, though it's been thousands of years since they really looked like pictures. So the same character can be read in quite different languages like Cantonese and Mandarin, and also in unrelated languages like Japanese and Korean, just as "5" can be read five, fünf, cinq, pyat'. Less well known to Westerners is that there is a large element of pronunciation in it: as many as 90% of the signs are compound, and part of them is a smaller sign from a simple word which very roughly sounds like the word. That's very roughly, and the resemblance can be so slight as to be useless in learning modern Chinese.
Around 1910 the Swedish linguist Bernhard Karlgren deciphered the pronunciation of ancient Chinese, specifically of the late Sui and early Tang dynasties, as contained in the authoritative dictionary Ts'ie yün (modern Qie yun) by Lu Fayan, published in 601. Using contemporary rhyming dictionaries to supplement the comparison of modern Chinese varieties, Karlgren came up with explanations for the strange diversity of phonetic components: they were much closer to each other in the time when they were first devised. His reconstruction, though subsequently modified, is regarded as essentially correct (and is one of the best feats of linguistic scholarship ever performed), and also explains the forms of descendants - including also the on-readings of Sino-Japanese.
He used the term Ancient Chinese to mean the one he was reconstructing, the immediate ancestor of Classical Chinese. For the language before that, he used the term Archaic Chinese, and did not draw so many conclusions about that. The Chinese languages are related to many other languages of Tibet and Burma, and the ancestral Sino-Tibetan speech can to some extent be reconstructed by looking at these. Later linguists have used the term Middle Chinese for this period, given the great depth of time that some form of Chinese has been recorded.
Now for some disclaimers. (i) I don't know much Chinese; (ii) Karlgren's notation requires fussy phonetic symbols I can't show here so I'll make some up; and (iii) I'm switching between Ancient Chinese and the pinyin transcription of modern Mandarin Chinese. So don't take any of this as gospel: I'm just conveying the basic idea. /msg me if you spot a mistake.
So Zhongguo 'China' comes from tiung-kwëk, and Beijing comes from pëk-kiòng. In that word the first bit pëk 'north' gives the Japanese hok- in Hokkaido, and the second kiòng 'capital' gives Japanese -kyo in Tokyo. The word nzhiët 'sun, day' gives Japanese ni- in Nippon and also the Ja- in the English name.
Ancient Chinese had final consonants p t k m n ng and Karlgren suspected it had d g as well in Archaic. Initially, it had a fair few more than modern Mandarin, including bh dh gh dhz jh ng nzh. It also had more vowels, but I can't notate them. It had four tones, multiplied out to eight by the fact that voiced initials caused a lower tone. There were some initial clusters such as kl pl.
In 1949 Karlgren published a study showing that Ancient Chinese had case marking on pronouns: different words 'I' vs 'me', and likewise for 'you' and for 's/he'. This was very significant, because Chinese had long been considered a very simple language grammatically, possibly representing the original "primitive" state of all human language. The discovery of subject/object forms confirmed that Chinese, like all other languages, had passed through different grammatical stages in its history. However, schist tells me that this part of Karlgren's work has been shown up as an artefact of his selection of texts, and the question is now open. But the view that Chinese is either special or primitive in any deep sense is untenable.