Word is important in Chinese reading. However, when inter-word spaces are inserted into Chinese text, there is no facilitation or disruption to adults' reading. Researchers argued that there was a trade-off between word segmentation facilitation and disruption due to format unfamiliarity. To assess the trade-off hypothesis, in Experiment 1, we tested Grade 1, 2 and 3 children who have less reading experience than adults and manipulated four spacing conditions: normal unspaced, word spaced, character spaced, and nonword spaced text. In Experiment 2, we collected data from Grade 1 and 3 with the word spaced condition and normal unspaced condition. Overall, global analyses from both Experiments consistently showed that word spacing facilitated Grade 1 reading, with much reduced facilitation for higher grade readers; local measures (total reading time and second-pass reading time) replicated the same pattern in which word spacing effects were more pronounced among younger readers. In summary, we obtained greater facilitatory effects of word spacing for younger compared with elder readers, which provides strong evidence for the trade-off hypothesis.