Giving hongbao - literally translated as "red bags" - is a must for important social and family events in China.

During wedding ceremonies and receptions, guests should offer the packets to brides and grooms. In this case, the cash is intended to cover the expense of entertaining the guests, because it's not uncommon for Chinese marital celebrations to host hundreds.

These envelopes would most often be imprinted with the Chinese character for "double happiness".

And during the Lunar New Year, elderly people should proffer the packets to children. In South China, married people should give them to single adults in their extended family. These envelopes are usually decorated with auspicious images or Chinese characters, the most common of which for this time of year is fu (lucky).

A red packet, or hongbao, is the most common gift for children during the Spring Festival. Lu Jianshe

According to tradition, children should kneel before their grandparents and kowtow three times before the elderly would bestow red envelopes upon them. Sometimes, however, the kiddies don't get to keep the cash, and their parents repackage it to pass it along to other children. The idea is that the exchanges should end up roughly even by the time the festival celebrations winds down.

For the last few years, Chinese media have reported a growing resistance to the tradition, as more prosperous family members feel greater pressure to give larger amounts, which sometimes add up to more than a month's salary. Usually, the envelopes contain between 100 and 200 yuan ($14-28), but they could contain as much as 1,000 yuan.

For both weddings and Lunar New Year celebrations, the first digit of the total sum per envelope given should be an even number. However, giving an amount that adds up to the number four - the word for which in Chinese rhymes with the word for "death" - is, socially speaking, a mortal mistake.

Hongbao are also given at funerals. This is the only time when the sum in an envelope given to surviving family members of the deceased should begin with an odd number.

Many companies in China today give employees holiday bonuses in the form of hongbao before Spring Festival begins.

Historians are uncertain of the origins of the hongbao-giving tradition.

However, most agree that during the Qing Dynasty (1644-1911), elderly people would bind stacks of coins with red yarn. These were known as yasuiqian - literally translated as "pressed money" - and were believed to extend longevity by safeguarding the older generation from illness and death.

When printing presses became commonplace after the founding of the Republic of China in 1911, the custom changed so that the strands of string were substituted for envelopes, and coins were replaced with banknotes.

(China Daily by Erik Nilsson February 4, 2008)