In Traditional Chinese Medicine (TCM), Huai jiao belongs to the 'Herbs that stop bleeding' category. Like the name indicates these herbs tend to have hemostatic properties, meaning that they help stop various types of hemorrhages and echymosis. Unlike other herbs they often tend to be used externally.
Furthermore Huai jiao is Cold in nature. This means that Huai jiao 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 Huai jiao can help restore a harmonious balance between Yin and Yang.
Huai jiao also tastes Bitter. 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. Bitter ingredients like Huai jiao tends to have a cleansing action on the body by clearing Heat, drying Dampness and promoting elimination via urination or bowel movements.
The tastes of ingredients in TCM also determine what Organs and Meridians they target. As such Huai jiao is thought to target the Gallbladder, the Large intestine and the Liver. Similar to modern medicine, in TCM the Gallbladder stores and releases bile produced by the Liver. It also controls the emotion of decisiveness. The Large Intestine on the other hand receives the "impure" parts of the digested food from the Small Intestine, absorbs the remaining fluids and excrete the remainder as feces. The Liver is often referred as the body's "general" because it is in charge of regulating the movements of Qi and the Body Fluids. It also takes a leading role in balancing our emotions.