This is an important traditional celebration and it is actually called Lunar New Year. Those of us in the West tend to call it Chinese New Year. It is a time where people visit friends and family. The color red is used in decorations, including Chinese lanterns. New clothes are purchased and worn. Red packets or envelopes of money are given to kids and newly married couples, singles and the elderly.
What is the origin of Lunar New Year? One tale is that the celebration started with a mythical beast called "Nian" or "Year." Nian apparently came to villages on the first day of the New Year and ate livestock, crops, and people, including kids. If villagers put food at their front door on New Year's Day, supposedly Nian would eat the food and leave the villagers alone. As the story goes, one time a child was wearing red and Nian got scared and ran away. Thus, villagers put out red Chinese lanterns and other decorations to keep Nian away. Villagers also used firecrackers to scare away the monster.