The seventh month of the Lunar calendar is considered the "Chinese Ghost Month". On this month, the spirits of the deceased are released and they come back to wander off in the living world.
It is said that some spirits may be restless and will have to be appeased, and thus, worshippers will burn paper money and make food and incense offerings to make sure they are back in the good graces of their ancestors and any other wandering ghost that may happen to "drop by".
This is the opposite of the Qing Ming Festival when the living pay homage to the dead. During Ghost Month, the gates of the afterworld are opened, and the spirits come to pay a visit to the world of the living.
Spirits are powerful and people treat them with respect. To keep them happy, people will make offerings of food and incense and burn ghost money throughout the month.
Sometimes you see offerings by the side of the road. This is for the orphan spirits who have no one to take care for them. You wouldn't want a stray angry spirit roaming around your home... Unhappy spirits can make bad things happen!
The Hungry Ghost Festival marks the middle of the Ghost Month on the 15th day of the 7th lunar month, and offerings and activities are held particularly on this day.
The seventh lunar month typically falls around August in our calendar.
Activities other than the usual offerings of incense, Chinese paper money and food, include Chinese Opera and the dragon and lion dances with plenty of noise to scare away the evil ghosts, and are held on the streets and in parks and plazas throughout the cities.
Rituals and ceremonies are performed to appease the spirits. To learn more about Chinese Ghost Month and the Hungry Ghost Festival, watch this short documentary video: