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The Dragon Empire was the name of an empire located near Federation space. The throneworld of the Dragon Empire was the planet Pai, which was located near the Dragon Nebula, whose appearance was an inspiration for the name of the empire.
The belief was that the citizens of the Dragon Empire were Humans descended from colonists that left Earth shortly after the Eugenics Wars and based their society around medieval China. After colonizing the planet Pai, they proceeded to form an empire based around less then a dozen planets that all orbited the same star.
Despite this, the Empire suffered from civil war struggles between the emperor and his rivals. These uprising's were conducted for several years by the noble Lord Lu Tung. In addition to this, the blood thirsty G'kkau race were also known to prey on the people, with Starfleet's primary worry being that the G'kkau would begin an invasion of the empire.
After the discovery of the Dragon Empire, attempts were conducted on accepting them into the Federation. However, to do so required peace, which would happen when the son of the Dragon married the daughter of his chief rival, Lu Tung. The starship USS Enterprise-D would be present during these negotiations and marriage ceremony as Starfleet's representatives for the treaty being formed that would accept the Dragon Empire into the United Federation of Planets. (TNG novel: Dragon's Honor)
Though the Dragon Empire possessed a small territory, it boasted a small fleet of forty-five interplanetary ships, and six nebular cruisers.