The hole, probably bored by pecking or tubular-boring, was for tying a handle onto the ax.  Because jade was so costly, it is unlikely this was a utilitarian tool.  Its use was probably more symbolic or ritual.  The thin, sharp blade shows no sign of wear.  

The presence of such jade objects indicate a high level of skill in fine crafts.  Due to its hardness, jade cannot be carved with metal blades but must be ground with abrasive sand in a slow, labor-intensive process.  A high level of skill is also evident in the finely carved ivory and bone fishhooks, combs, and hairpins found at Dawenkou.