This paper uses co - integration test and vector error correction model to study China's monetary demand stability based on the background of economic reform and financial development and on classical monetary demand theory. The analysis results show that co - integration relation exists in monetary demand, income, interest rate and inflation. China's monetary demand shows long -term stability character because it is affected by income. Long - term stable monetary demand has unobvious effect on short - term growth. Monetary demand function shows high income elasticity and low interests elasticity. The exogenousness of interests rate weakens the adjustable effect of monetary demand on interests rate. Based on short - term Granger test of VEC Model, short - term equilibrium relationship of final objective between support monetary quantity, interest rate and monetary policy exists.