Holistic processing has been identified as an expertise marker of face and object recognition. In contrast, the expertise marker of recognizing Chinese characters is reduced holistic processing (Hsiao & Cottrell, 2009), which is driven by Chinese writing experiences rather than reading ability (Tso, Au, & Hsiao, 2011). Here we investigate the developmental trend of holistic processing in Chinese character recognition and its relationship with literacy by testing children who were learning Chinese at a public elementary school in Hong Kong. We found that the holistic processing effect of Chinese characters in children was reduced as they reached higher grades; this reduction was driven by enhanced Chinese literacy rather than age. In addition, we found that writing predicts reading performance through reduced holistic processing as a mediator. We thus argue that writing hones analytic processing, which is essential for Chinese character recognition, and in turn facilitates learning to read in Chinese.