China Witness, By Xinran, trans. Julia Lovell, Esther Tyldesley & Nicky Harman

As she took her leave of Yao Popo, a medicine woman she had met by chance on the step of her ramshackle shop in Xingyi, south China, Xinran asked her to share the three happiest and unhappiest times in her life. Yao Popo was fairly certain about her list: the second hardest thing, she said, was "bringing up seven children in a tiny room of only twelve metres square". The second hardest thing.

The interview with 79-year-old Yao Popo is the first of dozens that Xinran recorded for this incredibly moving and ambitious collection, and is as good as any as a representation of the whole. The hardest thing in her life, she said, had been "growing up without parents, without a home of her own, and with only a damp mud floor to sleep on". But never mind: her children had all survived the famine of the 1950s and 1960s; her husband had never hit her; and she loved to sit in front of her shop, "day in, day out, watching the world changing."

China Witness is the result of years of research by Xinran and a team of young Chinese students who, when they began the project, knew next to nothing about the country their grandparents grew up in. Teasing out the stories of this older generation was not easy. But, writes Xinran, preserving this recent history, before its owners are lost for good, "might be the most worthwhile act of my life."

If the approach of the Beijing Olympics earlier this year made it seem suddenly important for Western eyes to look at China, then the earthquake in the Sichuan province in May perhaps made it easier to see. But Xinran had been telling us about Chinese people's lives for many years before that. When she began this book, she explained: "The whole of history is outside the door. But inside the door are lots of stories that people don't like to speak about."

She began telling stories from within closed doors on her radio show in 1998. She continued in books such as The Good Women of China (2002) and Miss Chopsticks (2007), in which she looked with compassion and great understanding at the interior lives of real Chinese women. The personal is, of course, political, and it is when Xinran focuses on personal stories, particularly women's, that this book is warmest and most successful. She admits that "every time someone brings up China's problems or her dark side I cannot stop myself from trying to rebut them - we need our national pride." We don't need Xinran to defend the country's role in Tibet, or to explain the importance of "the Tenth Plenary Conference of the Chinese Communist Party in August 1973". We do need her to show us stories such as that of Lin Xiangbei, who was "accused and re-accused throughout every political campaign of the Maoist period... he ended up spending the best part of thirty years in and out of prison, during which time he lost his... wife. His six children were forced to survive alone, wandering the streets like beggars, scorned and humiliated by society." When asked gently if he had any regrets, "for almost two and a half minutes, old Mr Lin sat before me, staring up at the ceiling, his face twisted with pain. I didn't press him for an answer."

We must be grateful to Xinran's three translators, Julia Lovell, Nicky Harman and Esther Tyldesley, whose combined work – "putting Chinese clouds into an English box", as Tyldesley puts it – brings to us the voices of the oil prospectors and acrobats, bandits and teachers in this collection, as well as preserving Xinran's gentle tone. We should also share her optimism in the democratising influence of the internet – "a true 'cultural revolution' in Chinese society". Only "light and the brightness of understanding can destroy darkness", she writes, in summary. There is a great deal of light in this powerful book.