The narrator and Luo begin to notice the Little Seamstress, a nearby tailor's young daughter. The tailor is prized throughout the many mountain towns, since his visits always bring the opportunity for new fashion. Though he travels frequently amongst the villages, he never brings his daughter along.
One day, the narrator and Luo pass the tailor on their way to visit Four-Eyes, another city youth who is being re-educated in a neighboring village. Ten peasants carry the tailor on a sedan, while his gleaming but antiquated sewing machine is carried behind him. The tailor has heard about the narrator's musical skills, and he calls out to them about the violin.
Later, the narrator and Luo visit the Little Seamstress to get Luo’s pants lengthened. She impresses them with her beauty and her strong personality. Although she cannot read much, she explains that she enjoys spending time with city youths like them. She cooks soup for the boys, and Luo flirts with her by showing her that they both have second toes longer than the others.
On the way back to their village, the narrator asks Luo if he is in love with the Little Seamstress. He thinks about it and replies that he is not, because she is “not civilised, at least not enough for me!” (27).
Luo and the narrator are sent to work in the local coal mine, as part of their re-education. They despise the job. Pushing carts of coal is backbreaking work, and they live in constant fear of being crushed should the mine's poor supports collapse.
One day, Luo catches malaria, so the villagers whip him with tree branches - a traditional remedy. As they whip him, an unopened letter from the Little Seamstress slips from his clothing. The narrator reads it. Although she can barely write, the Little Seamstress explains that she has arranged for Luo and the narrator to take two days off from the mines so that they can give a film show in her village.
Though still struggling with the malaria, Luo insists that he is well enough to accept the Little Seamstress’s invitation. He and the narrator depart for her village, and Luo struggles terribly on the journey.
When they arrive, the Little Seamstress makes an herbal poultice that she believes will help Luo. She also invites four elderly sorceresses to frighten away the evil spirits that cause the illness.
They sit with him throughout the night, but the sorceresses start to fall asleep. To keep the women awake, the Little Seamstress begs the narrator to tell a film story. He chooses a popular North Korean melodrama (The Little Flower-Seller), but he is not as gifted a storyteller as Luo is, and he notices that the sorceresses are not moved by the story's first tragic scene. From behind the curtain of his bed, Luo suddenly delivers a dramatic line from the end of the movie, which drives the sorceresses to tears.
The oil lamp begins to flicker out, and before it is relit, the narrator believes he sees the Little Seamstress sneakily kiss Luo on his forehead.
Dai’s portrayal of Chinese Communism is complex and nuanced. Certainly, he does not pull punches at the gritty reality of re-education. The narrator and Luo's hard labor in the mines is suitably unpleasant to consider, as are the details of Luo's malaria. Further, certain details of village life can be read as critiques of the Communist Party. For example, the villagers do not even know what a dentist is, despite the government’s professed interest in improving the lives of the working poor. The authoritarian government also influences how individuals interact with each other. For instance, the narrator and the Little Seamstress are both awkward and nervous when they discuss whether to hire the sorceresses, because practicing religion is illegal. Despite not having many friends, these young people must treat each other with distrust, as anyone could inform on anyone.
Yet despite these critiques, Dai also suggests that the narrator and Luo learn from their forced interaction with the people of the villages. Luo, of course, finds love with the Little Seamstress. These chapters also show the narrator’s self-confidence increasing. When he first begins to perform the film shows with Luo, he is nervous, and downplays his abilities. However, the narrator begins to recognize his own talents when he recounts the story of the The Little Flower-Seller for the sorceresses. By including these details, Dai is not downplaying the cruelty of the Cultural Revolution. Rather, he is showcasing the resilience of his characters; they are able to learn and grow despite their terrible circumstances. No matter how authoritarian the government, there are moments in which individuals will coexist according to their personalities, and grow from those encounters.
Balzac and the Little Chinese Seamstress is less about making black-and-white political statements than it is about depicting life in China during a time of political upheaval. While the Cultural Revolution transformed the lives of those who survived it, Dai suggests that the political turmoil faded into the background of daily life for most people. Consider, for example, the role that propaganda plays in the book. The narrator acknowledges that the films he presents to the villagers are propaganda, and he frequently compares situations to ones he’s seen in propaganda materials. However, he rarely thinks critically about the propaganda; instead, it is just another part of life. Further, for all of the ideology that these villagers are forced to support, they enjoy the film stories not because of their Communist virtues, but for the emotional resonances.
This section also introduces the contrast between book learning and life experience, which will become a motif in the novel. Luo criticizes the Seamstress for being uneducated, but she shows a great deal of practical intelligence that the boys lack. This is most apparent when she makes the herbal poultice for Luo, arguably the most medically sound treatment he receives. Similarly, although the narrator and Luo believe they are more educated than the villagers, they learn about relationships and emotional maturity from their experiences. Certainly, they are sexually naive, and they make little effort to disguise this fact. Dai suggests that practical and academic learning both have a place in life, and that people should strive to get as much of both types of exposure as possible. In the same way that Mao's China should not have banned Western literature, these 'city youths' should not so quickly assume they have nothing to learn from the peasants of Phoenix of the Sky.
This section also develops the related theme of skill-sets. In the first chapters, Dai suggests the injustice of undervaluing certain skill-sets. For instance, Luo is a brilliant story-teller, but no one will pay him for that skill, and it will likely never help him leave the mountain. The narrator’s violin skills are only slightly more practical – although the villagers have no use for music, his ability may help him leave re-education. In contrast, the tailor and his daughter have much more practical skills, and are richly rewarded for them. In the city, however, a tailor's skills would arguably be less valued than those of an intellectual or storyteller. While Dai never explicitly makes a statement about the distinction between skill-sets, it does inform the story and its conflicts.
The Little Seamstress’s social status is particularly interesting in these terms. The narrator explains early in the novel that “the tailor lived like a king” (22). The Seamstress herself lives in relative luxury – she uses a new sewing machine and owns shoes, unlike many of her peers. Within village society, she is a member of the elite. Even though Luo is quick to consider her as unsophisticated, he enjoys the benefit of fraternizing with a 'higher' class. Both boys are not only becoming less foreign by forming a friendship with her, but they are in fact moving up the mountain's social hierarchy. These questions of relative class distinctions certainly add weight to the Little Seamstress's final decision, when she chooses to forgo her distinction on the mountain for the opportunity to compete in the city.