If you have lived in China long enough, you have probably encountered the phenomenon of the "hongbao."
The origins of the hongbao 红包 are not common knowledge among Chinese today, even our grandparents. But by digging up folklore passed around online in Chinese, I pieced together the following story that explains the beginnings of the red envelope. Keep in mind that there are different versions of the tale.
In ancient times, there was an evil fairy called Sui (this word, 祟, means evildoings by fairies and ghosts). It was said that this evil Sui was totally black except for his hands, which were white. He was supposed to appear every Chinese New Year's Eve and touch the foreheads of sleeping children during the night, causing a fever and sleep talking that would ultimately leave the child retarded. As a result, parents would stay up through the night on guard. Today, Chinese celebrate New Year's Eve by staying up—called 守岁 (shǒusuì), or "waiting for Sui."
Once, there was a family who lived in Jiaxing, Jiangsu. The parents, who were already quite aged, had a young son. One New Year's Eve, the parents were wrapping copper coins in red paper to entertain their son and keep him awake. Red represents luck, energy, and brightness in Chinese tradition, and it is also believed to protect against evil.
As the night wore on, the child could not help but fall asleep; and later, the parents couldn't keep themselves awake, either. By dawn, they could not stave off their sleepiness any longer and decided to go to bed. Before going to sleep, they put the red-paper-wrapped coins beside their son's pillow. No sooner had everyone fallen asleep when the evil fairy Sui appeared. He walked toward the son's bed, reaching his colorless hands out to the sleeping child's forehead. But just as he was about to touch the child's skin, a golden light radiated from one of the wrapped coins, and the Sui was scared away.
The story spread through the village, and all the people began to wrap coins in red paper to protect their children. Those wrapped coins were called yā suì qián (压祟钱 or money to suppress the Sui); as time went by, 压祟钱became压岁钱 (same pronunciation) and the tradition 守祟 became 守岁 (same pronunciation). As you astute readers may have already guessed, because the coins were wrapped in red paper, there were also referred to as hongbao—red package.
As times went by, hongbao ceased to serve as a protector from evil spirits. It became a symbol of best wishes and blessings to children. In Chinese tradition, adulthood is not usually denoted by age but rather by marital status.
One special characteristic of hongbao culture worth mentioning is that a hongbao should almost always be sealed so that the receiver won't know how much money it contains. And because the core spirit of hongbao is blessing, it would be impolite to open the hongbao in front of the person who gave it. Making such an embarrassing faux pas would indicate that all you care about is the money itself, not the wishes that the money represents.
Hongbao became widely used as a gift, not only during the Spring Festival, but also for birthdays, weddings, and many other celebrations. And as China became more and more commercialized, hongbao also came to be used for employee bonuses. At the same time, the core spirit of hongbao began to switch from blessings to the money itself. As a result, hongbao can nowadays simply refer to money given to another, and you might hear reports of hongbao being taken as a form of "gray income" by journalists, doctors, or other professionals.
People choose paper envelopes with nice phrases and symbols printed on it. If you go to buy a hongbao, often you will be asked if it is for a birthday or wedding to ensure you choose an envelope with an appropriate greeting.
But still the question stands: How does one know how much money to put in a hongbao? Well, let me tell you, it's a difficult question for Chinese, too. In fact, it is an art. Generally speaking, to understand the rules of giving and receiving hongbao, you will have to understand how Chinese build their relationships with one another.
There are no set rules. It depends on the nature and closeness of your relationship—the closer you are, the more money you would give (within your financial ability). But there are some exceptions. To somebody with whom you are very close, you might choose to give a gift rather than a hongbao because money cannot represent wishes anymore.
In certain instances, such as weddings, you will have to consider social expectations and how much money other people give. And if you are an "uncle" or "aunty" to any children, there are also expectations within the family on how much to give. Of course if you have little to give, you just do the best you can. And, of course, these rules of thumb can vary from region to region.
Because giving hongbao sometimes really emphasizes measuring the value of relationships, some young Chinese have decided to abandon the custom, especially during occasions such as birthdays and weddings. But for most Chinese, hongbao are still very much a part of tradition.