This longitudinal study examined the relationship between pedagogical continuity in literacy education and early literacy development by comparing Chinese children in Hong Kong and Shenzhen. Stratified random sampling was used to select 24 preschool and Primary 1 classes in four communities catering to middle‐class families in each city. The 24 teachers were interviewed about their teaching methods and views on pedagogical continuity in individual sessions. Further, their teaching activities were videotaped over a period of a week. Their students (n = 758) completed a Chinese literacy attainment test at the beginning and at the end of the same academic year. Analyses indicated that Hong Kong students outperformed their Shenzhen counterparts in Chinese literacy attainment, at both preschool and primary levels, concurrently and longitudinally. This suggests that the holistic approach followed in Hong Kong might have a more positive impact on children's literacy development than the approach followed in Shenzhen. Implications of the findings for early childhood curriculum reform are discussed.