A 4-year longitudinal study was conducted to examine the relationship between Chinese children's phonological skills and their success in reading. Initially, 100 Hong Kong Chinese children were tested on visual and phonological skills at the age of 3, before they could read. The findings showed that prereading phonological skills significantly predicted the children's reading performance in Chinese 2 and 3 years later, even after controlling for the effects of age, IQ, and mother's education. The main reason for this relationship is that phonological knowledge helps children to use the phonetic component in Chinese characters.