Using a longitudinal sample of young Chinese students (fall and spring in grades 1 and 2: times 1-4, respectively) and growth curve analysis, this study examined whether the initial status and growth rates of compounding awareness from time 1 to time 4 uniquely contribute to reading comprehension at time 4 and whether word-reading efficiency at time 4 mediates the association between initial status and growth in compounding awareness and reading comprehension at time 4. The results indicated that initial status and growth rates of compounding awareness made a significant direct contribution to reading comprehension at the end of second grade after controlling for IQ, phonological awareness, and vocabulary knowledge. The relationship between initial status and growth rates of compounding awareness and reading comprehension were fully mediated by word-reading efficiency. The findings underscore the importance of growth in compounding awareness for reading comprehension and add to the literature about the nature of the morphological awareness and reading comprehension relationship in Chinese.