In Traditional Chinese Medicine (TCM), Xiao Tong Cao belongs to the 'Herbs that drain Dampness' category. These herbs are typically diuretics, meaning that they promotes the increased production of urine in order to remove Dampness that has accumulated in the body. According to TCM Dampness accumulates first in the lower limbs, causing edema and impaired movement. From there, if unchecked, it can move upward and impair digestion and eventually the respiratory system.

Furthermore Xiao Tong Cao is Cold in nature. This means that Xiao Tong Cao typically helps people who have too much 'Heat' in their body. Balance between Yin and Yang is a key health concept in TCM. Those who have too much Heat in their body are said to either have a Yang Excess (because Yang is Hot in nature) or a Yin deficiency (Yin is Cold in Nature). Depending on your condition Xiao Tong Cao can help restore a harmonious balance between Yin and Yang.

Xiao Tong Cao also tastes Sweet. The so-called 'Five Phases' theory in Chinese Medicine states that the taste of TCM ingredients is a key determinant of their action in the body. Sweet ingredients like Xiao Tong Cao tends to slow down acute reactions and detoxify the body. They also have a tonic effect because they replenish Qi and Blood.

The tastes of ingredients in TCM also determine what Organs and Meridians they target. As such Xiao Tong Cao is thought to target the Stomach and the Lung. In TCM the Stomach is responsible for receiving and ripening ingested food and fluids. It is also tasked with descending the digested elements downwards to the Small Intestine. In addition to performing respiration, the Lungs are thought in TCM to be a key part of the production chain for Qi and the Body Fluids that nourish the body.