The impact of near-surface observations on analysis and forecasting in complex terrain is studied by in-troducing the role of terrain in the background error horizontal correlation model.Observation information propagates isotropically on the model level in the height-based terrain-following coordinates since the back-ground error horizontal correlation in CMA-MESO 3DVar system is characterized by an isotropic Gaussian correlation model.However,in the near-surface layer with complex topography,the propagation of obser-vation information is blocked by mountain ranges,and thus its background error covariance is inhomoge-neous and anisotropic,and furthermore,the propagation of observation information should vary with to-pography.The background error horizontal correlation coefficients in complex terrain are computed using NMC method by National Meteorological Center of USA.Results show that the blocking of large terrain causes the background error horizontal correlation coefficients to decrease more rapidly across mountain ranges,where the near-surface wind field is more localized than the temperature and humidity fields,with smaller horizontal correlation characteristic length scales,and the wind field information propagates over a closer distance.Based on the actual statistical structure,a Gaussian correlation model that includes effects of terrain height and terrain gradient is constructed,and the newly constructed horizontal correlation mod-el accurately characterizes the decrease after mountain ranges are blocked.In CMA-MESO 3DVar analy-sis,the impact of terrain on the propagation of observational information is effectively incorporated by in-cluding a terrain height error term in the background error level correlation model.Idealized experiments show that the horizontal correlation modeling scheme that considering the terrain height error term allows the observation information to propagate anisotropically with the effect of observation information signifi-cantly diminishing across large terrain and the analysis increments more reasonable.Results of a forecast experiment for a heavy precipitation process in northern China indicate that the correlation modeling scheme that varying with the terrain height propagates the anisotropy of the ground observation informa-tion and weakens the analytical increment near the ground with large terrain,and thus makes a slightly bi-ased and positive contribution to the precipitation forecast neutrality.Results of a 5-day hourly cycle rapid updating analysis and forecast for precipitation processes in East China show that the horizontal correlation modeling scheme with terrain elevation makes a positive contribution to 10-m wind field at the ground level and the precipitation forecast within 24 hours.