Summary： In the context of the frequent occurrence of financial crises, extreme events such as rare disasters on a global scale, the academic circles have paid long-term attention to and had deep reflection on financial stability and its macroeconomic effects. This paper measures China's financial stability from two aspects, namely function exertion ability and shock resistance ability, combining the dynamic CRITIC method to synthesize the comprehensive financial stability index. The TVP-VAR model is used to empirically explore the interactions between and among China's financial stability, the business cycle, the financial cycle, and the state dependence. Research shows that the stability of China's financial system takes the economic new normal as the watershed, showing the characteristics of stage heterogeneity. Before the economic new normal, financial stability showed a large fluctuation trend. However, since the new normal of the economy, it has been in a small fluctuation stage. In addition, The COVID-19 epidemic in 2020 did not pose a serious impact on China's overall financial stability. Further research finds the impact of financial system function exertion ability and shock resistance ability on business cycle and financial cycle has significant time-varying and asymmetric characteristics. And the stable state of the financial system will not only restrict the healthy development of economy and finance, but also be affected by the feedback of business and financial cycle fluctuations. Especially, the departure of financial cycle from business cycle will have a significant negative impact on the function exertion ability and shock resistance ability of the financial system. Therefore, in order to further improve the financial stability regulatory framework and strengthen the real-time monitoring and early warning mechanism of financial risks, a scientific and reasonable financial stability evaluation index system should be actively established to achieve quantitative measurement of financial stability. Government departments should not only continuously improve the macro -prudential policy system, enhance the ability to prevent and resolve financial risks, but also intensify financial counter-cyclical regulation, adhere to the principle that the financial sector should serve the real economy, and actively optimize the coordination and matching mechanism between financial structure and economic structure. 

Keywords： Financial Stability；Business Cycle；Financial Cycle；Function Exertion Ability；Shock Resistance Ability