This paper explores the transformative role of music literacy in the growth of the individual in the Chinese educational system. The skills that students gain in music literacy, which include musical grammar (theory), logic (composition), and rhetoric (performance), as well as music writing and reading, significantly enhance their intellect and moral, social, and artistic sensibilities. Based on Confucian educational ideals complemented by modern educational frameworks, such as Gardner’s multiple intelligences and Goleman’s emotional intelligence, the paper outlines the evolution of music literacy in the educational system and its embodiment of traditional self-cultivating values with contemporary themes centred on innovative spirit and global citizenship. This paper provides a qualitative and systematic review of music literacy based on a case study of urban and rural Chinese schools, highlighting the diverse aspects of music literacy. The primary conclusion explains the role of music education in the development of self-discipline, emotional control, empathy, and creativity, as well as the fostering of collaborative and leadership structures through ensemble performance. Evidence shows that music education is unequally available in urban and rural areas because of the uneven distribution of music teachers and the emphasis on STEM in education policies. The study points to the urgent need for sound policies in education that enhance music literacy through fair resource allocation, educator development, and digital outreach to the underserved. By fostering music literacy, China can equip students for a connected, innovative global economy while instilling core values of humanity. These results add to the conversations on holistic education and reinforce the positioning of music literacy as a foundational element in the country's educational reforms.