Having lost his entire fortune in the train robbery, Yen still assures Megan that everything will be all right. He invites her into his bedroom to see some swords, but Megan mistakes his intentions. He explains that he could never accept anything that the heart does not give willingly. Holding her in his arms, he admits that he was intending to kill her, as she promised him her life for Mah-Li's disloyality, and then he intended to kill himself. Megan runs crying from his room. Yen calls for a servant but realizes that they have all deserted him. He prepares a cup of tea and laces it with poison. Just as he's about to drink it, Megan enters his room, dressed Chinese style. She kneels at his feet and promises never to leave him. He tenderly wipes the tears from her eyes, but she continues to cry. Without saying a word, Yen drinks his bitter tea and promptly dies. In the final scene, as Megan and Jones head back to Shanghai on a boat, Jones eulogizes Yen while Megan sits by wordlessly. Jones expresses the hope that, when he dies, he'll go wherever Yen is. 'And I'll bet I find you there, too,' he says to Megan.
From the content of her daydream, which begins with a fiendish Yen breaking into her bed chamber and ends with the handsome General making love to her, it's obvious that there is an attraction on Megan's part as well.