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Previous research has demonstrated that subjective socio‐economic status (SES) and school social capital are associated with a wide range of socio‐emotional outcomes for children. Less is known about whether subjective SES is linked to overall child development and whether school social capital is a mediator in developing countries. The current study aimed to examine the association between subjective SES and positive youth development (PYD) among young adolescents in China, explore whether student–teacher relationships and student–student relationships mediated this association, and test whether there were gender differences in these associations. The analytical sample included a total of 1011 seventh‐graders (mean age = 13.24, SD =.69; 53.70% boys) recruited from Beijing and Anhui Provinces. The results showed that subjective SES was positively and significantly associated with PYD and that student–teacher relationships and student–student relationships played independent and joint mediating roles in the link between the two constructs. In addition, girls benefited more than boys from having closer relationships with teachers. Our findings highlight the importance of promoting school social capital in reducing PYD disparities across subjective SES levels, and suggest that school should be an effective venue for interventions to promote PYD among young adolescents in China. [ABSTRACT FROM AUTHOR]