Banners of this type would have been used in the palace, hung against pillars to mark a sacred space.
A similar, but longer, banner dated mid-19th century is illustrated by R.D. Jacobsen, Imperial Silks; Ch'ing Dynasty Textiles in The Minneapolis Museum of Arts, 2000, vol. II, pp. 992 - 3, no. 491. The author notes that large banners of this type were used to "enliven the tall interior spaces at palaces and temples during festive events".
Another similar banner suspended from a dragon-decorated cloud-shaped gilt-wood plaque and dated to the Qing dynasty (1644 - 1912) in the Goldie Sternberg Collection, included in an exhibition of Chinese textiles at the Art Gallery of New South Wales, 30 July - 24 October 2004, is illustrated by J. Rutherford, 'Celestial Silks: Chinese Religious and Court Textiles', Arts of Asia, July - August 2004, pp. 33 - 46, fig. 26.