This study investigated how Chinese-English bilingual children process compound words in their two languages and how that processing skill in one language affects reading skill in the other language. Experiments 1 and 2 investigated the bilingual acquisition of compound words, using a lexical-decision paradigm. Each compound was composed of two constituent morphemes in the target language. The combination of the translated equivalents of the constituents formed a new translated compound word (or nonword) in the nontarget language. In both Experiments 1 and 2, when the target language was English, the lexical status of translated compounds in the nontarget language was shown to affect the accuracy of lexical decisions in the target language. When the target language was Chinese, the effect of the lexical status in English was not significant in Experiment 1 and disappeared after the effect of familiarity was controlled in Experiment 2. The results of Experiment 2 further showed that the effect of the lexical status of translated compounds was independent of semantic transparency and language proficiency. Those results provided evidence of decomposition in both semantically transparent and semantically opaque compounds. The stronger effect from L1 to L2 than from L2 to L1 is consistent with the Revised Hierarchical Model (Kroll & Stewart, 1994).

Experiment 3 investigated the awareness of compound words and reading skills and their relationship in a group of Grade 2 and Grade 3 Chinese-English bilingual children. Comparable tasks in Chinese and English were designed to test students' morphological awareness of compounds, phonological awareness, oral vocabulary, word reading, and reading comprehension. Results of structural equation modeling showed that, within each language, compound awareness was a significant predictor for both real-word naming and reading comprehension. Across languages, English compound awareness was a significant predictor for reading comprehension in Chinese. Those results suggest that compound awareness might play a critical role in the reading development of Chinese-English bilingual children.