Research on healthy life expectancy (HLE) in China has been fueled by a spate of new data sources and studies, yet no consensus is reached on the pattern of HLE changes and the underlying mechanism. This study examined the change of HLE in China over 20 years with long term national data. Health status, measured by activities of daily living, is combined with mortality to calculate the disability-free life expectancy by the Sullivan method. The results show that the HLE rose slower than life expectancy (LE) in 1994–2004, indicating morbidity expansion. However, in 2010–2015, the proportion of HLE to LE increased, manifesting morbidity compression. A counterfactual analysis further shows that health improvement has been increasingly important in increasing HLE in 2010–2015, despite the dominance of mortality decline. The findings suggest that morbidity can transition between compression, expansion and dynamic equilibrium over a long period due to different combinations of mortality and health improvements. Given the limited data in this study, whether and how morbidity transitions unfold in the future remains open and requires further research.