Children enjoy the holiday more than anyone else, largely because they get red wrappings of pocket money from their parents, grandparents and other relatives.
Experts say the custom, at least 1,800 years old, conveys new year greetings and aims to protect youngsters from ill luck.
In Chinese cities, the sum in each wrapping can range from 100 up to several thousand, but has to be an even number.
It can be given in exchange of a child's new year greetings, or be stuck under the child's pillow later during the night.
Many Chinese has the superstitious belief that if a person has a haircut during the first month of the lunar year, his maternal uncle will die.
As a result, barbershops open almost 18 hours a day in the pre-holiday rush for haircuts that lasts for at least two weeks until the New Year's eve.
While women like to spruce up for the holiday, even men with short hair like to take an extra haircut before the new year lest their hair will grow too long before their next haircut, scheduled on the second day of the second lunar month.
A Chinese legend goes that a poor barber loved his uncle dearly but could not afford a decent new year gift for him. So he gave his uncle a nice haircut that made the old man look many years younger. His uncle said it was the best gift he had ever had and wished to get a haircut every year.
After his uncle died, the barber missed him very much and cried every new year. Over the years, his "thinking of his uncle" (si jiu) was interpreted as "death of uncle" because in Chinese, their pronunciations are almost the same.
Editor: Liu Fang