The ancestors of the Chinese community in Penang came from various backgrounds, various dialect groups, clans and provinces, and they settled here during different periods in Penang’s history. They took up various trades and occupations, and established many religious and social institutions. Later, they established their family here, and built schools for their descendents.

Chinese education was only introduced to Penang in the early 20th century, a century later than the English schools were introduced. Penang Free School was founded in 1816, followed by Hutchings School in 1821, Saints Xavier’s Institution and Convent Light Street in 1851, Methodist Boys’ School in 1881 (was known as Anglo-Chinese School), St George’s Girls’ School (1884) and Methodist Girls’ School (1895).

Cheong Fatt Tze (Chang Bishi), a wealthy businessman, was worried that new generations of Chinese might eventually forget their mother tongue and their own culture. He saw education as a means to bring the Chinese into the 20th century. He, therefore, donated funds to build Chung Hwa School (1904) in Penang and Ying Sin School (1905) in Singapore. These schools were the oldest formal Chinese Schools established in South-east Asia as a result of influence by the educational reforms in China in early 1900s, Mandarin is the school’s medium of instruction.

Initially, the school had only an enrollment of 160 students and 8 teachers, classes were only conducted for primary level. The administration of the school came under the patronage of the school's board of governors. The school was originally located at the rented premises at the present day site of the Penang Chinese Town Hall in Jalan Masjid Kapitan Keling. In 1908, it moved into its own building in Maxwell Road.  

Chung Hwa Confucian School on Maxwell Road.  The school building was designed in 1907 by H.A. Neubronner, the same architect who designed the HongKong and Shanghai Bank building (was destroyed in second world war) and the present USM-ABN-AMRO Arts and Cultural Centre. Anglo-Chinese School was on the left side, after the school, moved to a new site next to Suffolk House, the school building was subsequently occupied by Li Teik School. Unfortunately, both school buildings on Maxwell Road were demolished in the late 1970s.