Accurate diagnosis of incipient faults in wind turbine (WT) assets will provide sufficient lead time to apply an optimal maintenance for the expensive WT assets which often are located in a remote and harsh environment and their maintenance usually needs heavy equipment and highly skilled engineers. This paper presents an online bearing clearance monitoring approach to diagnose the change of bearing clearance, providing an early and interpretable indication of bearing health conditions. A novel dynamic load distribution method is developed to efficiently gain the general characteristics of vibration response of bearings without local defects but with small geometric errors. It shows that the ball pass frequency of outer race (BPFO) is the primary exciting source due to biased load distribution relating to bearing clearance. The geometric errors, including various orders of runouts on different bearing parts, can be the secondary excitation source. Both sources lead to compound modulation responses with very low amplitudes, being more than 20 dB lower than that of a small local defect on raceways and often buried by background noise. Then, Modulation Signal Bispectrum (MSB) is identified to purify the noisy signal and Gini index is introduced to represent the peakness of MSB results, thereby an interpretable indicator bounded between 0 and 1 is established to show bearing clearance status. Datasets from both a dedicated bearing test and a run-to-failure gearbox test are employed to verify the performance and reliability of the proposed approach. Results show that the proposed method is capable to indicate a change of about 20 µm in bearing clearance online, which provides a significantly long lead time compared to the diagnosis method that focuses only on local defects. Therefore, this method provides a big opportunity to implement more cost-effective maintenance works or carry out timely remedial actions to prolong the lifespan of bearings. Obviously, it is applicable to not only WT assets, but also most rotating machines.