While in some languages compounding can be considered peripheral, in Chinese compounding is the most productive means of word formation. It has been shown that approximately 80% of Chinese words are compound words (Xing, 2006). In the corpus of neologisms proposed in The Contemporary Chinese Dictionary (2002) more than 90% of all new words are compounds . Therefore analyzing Chinese compounds means analyzing the most significant morphological phenomenon of that language. Over time different theoretical approaches have been adopted in the analysis of Chinese compounds. In this article, starting from the classification of compounds argued for by Bisetto and Scalise (2005), we put forth a more detailed description of macro-types in order to be able to undertake an in-depth analysis of Chinese compounding. One much debated theoretical issue is the morphological head position in the languages of the world. This article discusses the headedness in Chinese compounds and proposes a new Head Position Principle for Chinese compounds, which challenges some widespread assumptions and could well be of interest for the analysis of headedness in other languages. In the attempt to identify head in Chinese compounds, we have identified a phenomenon never analyzed before, i.e. the formation of new compounds from underlying compounds, that we name ‘metacompounding’.