This article starts from the essential differences between the effects of China’s guiding cases and precedents of the US Common Law system. Then, it makes a factual study of what guiding cases have achieved in relation to the well-known functions of case law, and finds that guiding cases similarly function to adapt law to social needs and strengthen judicial autonomy. Following that, it adopts a cost–benefit approach to analyse differences in relation to the realisation of those functions, and finds that they can be explained in that approach. It concludes with the understanding that guiding cases serve as a tool of the Supreme People’s Court of China, and that there are limitations to their functions and Chinese characteristics.