Balzac and the Little Chinese Seamstress is about two teenage boys, Luo and the unnamed narrator, sent to a remote mountain near Tibet known as the Phoenix of the Sky to be re-educated, during the Chinese Cultural Revolution. Their parents have been declared “enemies of the people” and “reactionaries” by the Communist government. At their designated re-education site in the countryside, Luo and the narrator are ordered to work in the coal mines and the rice farms. Ironically, during this time of arduous labor they are confronted with some of most educational experiences of their lives. Both Luo and the narrator fall in love with a mountain girl, the daughter of the local tailor, known as the Little Seamstress. They also meet a fellow city kid, nicknamed Four-Eyes, who is being re-educated in a nearby town.
Luo and the narrator find out that Four-Eyes is hiding forbidden books, most of them by Russian and French authors. They convince him to lend them a book, Ursule Mirouet by Honoré de Balzac. Later, when Four-Eyes is released from re-education, Luo and the narrator steal the books. After immersing themselves in Western literature, they begin to see the world in a completely new way. They are especially thrilled to recount the stories in the books to the Little Seamstress.
The Little Seamstress develops a romantic relationship with Luo, much to the dismay of the narrator who also has feelings for her. She becomes pregnant, and this is revealed while Luo is away tending to his mother. The narrator helps her arrange an abortion in the district hospital of Yong Jing.
The stories that Luo and the narrator recount to the Little Seamstress have an unexpected and disappointing consequence. Inspired by them, she adopts a city accent and begins making modern clothing so as to look more like a modern woman. One day she departs without a word to Luo or the narrator. This sudden ending leaves the boys with broken hearts and confused spirits.