Two studies explored the nature of phonological awareness (PA) in Chinese. In Study 1, involving 146 children, awareness of phoneme onset did not differ from chance levels at ages 3-5 years in preschool but increased to 70% correct in first grade, when children first received phonological coding (Pinyin) instruction. Similarly, tone awareness was at better than chance levels from second year kindergarten (age 4), but increased strongly and significantly in first grade to 74% accuracy. In contrast, syllable and rime awareness increased gradually and steadily across ages 3-6 years. Patterns suggest different influences of age and literacy instruction for different PA levels. In Study 2, involving 202 preschoolers, variance in Chinese character recognition was best explained by tasks of syllable awareness, tone awareness, and speeded naming. Findings underscore the unique importance of both tone and syllable for early character acquisition in Chinese children.