There are five main colors in Chinese culture: green, red, yellow, white, and black. These all have strong associations and meanings behind them. Yellow was the color of the Emperor during certain dynasties, restricted in it's use during that time. It's considered an exceptionally beautiful color and has very positive connotations (ignoring the very modern association with pornography). In the case of red it is considered the color of luck, prosperity, and happiness. That is one of the reasons it is so prevalent everywhere in Chinese culture, especially around New Year. When the Communist party took power the color red was brought with it, but was not directly associated with the traditional Chinese history of red. The Communist principles were against superstition and the strong use of colors and their meanings were heavily tied into that. Likely though, it didn't hurt that their chosen color was already embedded in the culture in a very positive way. The Chinese flag colors were chosen to represent the Communist party and principles, but the colors use in everyday cultural aspects was already well established.