The Dragon Pearl is a well-known Chinese folk tales. The version presented here aims at brevity over completeness, but as this is an old story told across many regions, you can find many variations on the theme.
The story is set in rural China, under the rule of a greedy and uncaring emperor. The crops are failing and famine and drought sweep the land. A young boy scavenging for hay to sell finds a mysterious field of grass, and finds that when he harvests it, it rapidly grows back. Digging in the earth he finds a pearl. He takes the pearl home and his mother hides it in a sack of rice; the next day he is upset to find his never-ending field dead, but when he returns home he finds that the bag of rice that the pearl is hiding in is overflowing. He and his mother share the rice with their neighbors, and find that the rice continues to multiply. Eventually the emperor hears about it, and sends men to take the pearl. The boy hides the pearl by swallowing it, which magically turns him into a dragon. In some versions he stays to protect the land, and in other he ascends into the sky.
While dragons with pearls are common in Chinese art, this is more a matter of dragons loving pearls, and does not necessarily relate to this tale. However, this tale might be a good starting place to understand Chinese dragons; not evil, often wise, often have a pearl in their head, and it's always good to have a dragon on your side.