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By conducting semi-structural interviews with 103 Chinese youths across the country, the study identifies different ways which Chinese youths from divergent backgrounds process state-mediated and homogenised information on Chinese digital medias, leading to the division between "critical thinkers" and "passive consumers". The study then points out the fundamental role of digital literacy, a decisive factor in youths' identity construction. Accordingly, the study explains a connection between digital literacy and cultural capital, emphasising how cultural capital leads to digital literacy, tendering an innovative reinterpretation of Bourdieusian theory under digital context, while bridging up three concepts whose interconnection is often empirically overlooked: cultural capital, identity, and digital engagement.