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It is based on exact astronomical observations of the Sun's longitude and the Moon's phases.
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The Shang Dynasty is the earliest ruling Dynasty of China (1600-1046 BC). Furthermore, Chinese New Year was thought to originate during this period, in which people held sacrificial ceremonies in honor of Gods and ancestors at the beginning of each year.
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Chinese New Year is surrounded by myths and stories. Furthermore, a popular story involves a mythical beast called Nian that ate livestock, crops, and people during the eve of a new year. In order to stop Nian from attacking people and causing destruction, people put food at their doors for Nian. It was also understood that Nian was afraid of loud noises and the colour red, which resulted in red lanterns and firecrackers to be used.
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The date of the Chinese New Year festival is changed to the first month of the Chinese lunar calendar. During this time, people would celebrate by burning bamboo to make crackling sounds.
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During (220-420 AC) people began to entertain themselves. Customs include, a family coming together to clean their house, having dinner, staying up late on New Year's Eve originated amongst common people.
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The prosperity of economies and cultures during this time period enabled Chinese New Year to establish customs that are similar to modern times. Furthermore, the practice of setting off firecrackers, visiting friends and family, eating dumplings, are examples of this. Other forms of entertainment arose such as watching dragon and lion dances, and watching lantern shows. During this period the function of Chinese New Year changed from a religious celebration to entertainment and social festival.
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In 1912, the government decided to abolish Chinese New Year and the lunar calendar, however adopted the Gregorian calendar instead which made January 1 the official start of the new year.