To provide an updated estimate of the level and change in catastrophic health expenditure in China and examine the association between catastrophic health expenditure and family net income, we obtained data from four waves of the China Family Panel Studies conducted between 2010 and 2016. We defined catastrophic health expenditure as out-of-pocket payments equaling or exceeding 40% of the household's capacity to pay. The Poisson regression with robust variance and generalized estimated equation (Poisson-GEE) model was used to quantify the level and change of catastrophic health expenditure, as well as the association between catastrophic heath expenditure and family net income. Overall, the incidence of catastrophic expenditure in China experienced a 0.70-fold change between 2010 (12.57%) and 2016 (8.94%). The incidence of catastrophic health expenditure (CHE) decreased more in the poorest income quintile than the richest income quintile (annual decrease of 1.17% vs. 0.24% in urban areas, < 0.001; 1.64% vs. -0.02% in rural areas, < 0.001). Every 100% increase in income was associated with a 14% relative-risk reduction in CHE (RR = 0.86, 95% CI: 0.85-0.88) after adjusting for demographics, health needs, and health utilization characteristics; this association was weaker in recent years. Our analysis found that China made progress to reduce catastrophic health expenditure, especially for poorer groups. Income growth is strongly associated with this change.