Dragon Waves are used in Alkahestry/ Rentanjutsu, the Alchemy of the country of Xing. We are first shown how Dragon Waves are used when Mei Chan throws Kunais (Japanese throwing knives) at a collapsing mine. The Kunais then form a transmutation circle on the mine entrance. Mei Chan draws a transmutation circle next to her in the dirt that is identical to the pattern of the knives. She then performs Alchemy and rebuilds the collapsing mine, saving the men inside. Mei Chan achieves this by sending 'dragon waves' through the earth from her transmutation circle to the transmutation circle formed by the Kunais.
A dragon wave tattoo is also featured on Scar's right arm (and later left), and he uses them to assist in his use of Alchemy.