Objective: The purpose of this study is to understand the functional health of older adults in China and to assess the potential for advancing healthy and active aging. Method: Data of 13,739 older adults aged 50 years and older from the China Health and Retirement Longitudinal Study in 2011 were analyzed. Life expectancy in good perceived health, chronic-disease-free life expectancy, active life expectancy, and severe impairment-free life expectancy were calculated using Sullivan’s method. Results: At age 50 years, older adults had a life expectancy in good perceived health of 7.0 and 6.7 years in men and women, respectively. They would remain chronic-disease-free for 8.4 and 8.6 years, without activity limitation for 23.6 and 26.0 years, and severe impairment-free for 21.4 and 24.2 years. Discussion: The world’s largest aging population was spending a substantial proportion of remaining life years in suboptimal health and well-being, while remaining largely independent in basic self-care without severe impairments.