Holistic processing has been identified as an expertise marker of face and object recognition. By contrast, reduced holistic processing is purportedly an expertise marker in recognising orthographic characters in Chinese. Does holistic processing increase or decrease in expertise development? Is orthographic recognition a domain-specific exception to all other kinds of recognition (e.g. face and objects)? In two studies, we examined the developmental trend of holistic processing in Chinese character recognition in Chinese and non-Chinese children, and its relationship with literacy abilities: Chinese first graders--with emergent Chinese literacy acquired in kindergarten--showed increased holistic processing perhaps as an inchoate expertise marker when compared with kindergartners and non-Chinese first graders; however, the holistic processing effect was reduced in higher-grade Chinese children. These results suggest a non-monotonic inverted U-shape trend of holistic processing in visual expertise development: An increase in holistic processing due to initial reading experience followed by a decrease in holistic processing due to literacy enhancement. This result marks the development of holistic and analytic processing skills, both of which can be essential for mastering visual recognition. This study is the first to investigate the developmental trend of holistic processing in Chinese character recognition using the composite paradigm.