"Xiao Wu" takes place in the year 1997, with China reclaiming Hong Kong. Xiao Wu is a pickpocket in one of the worst provincial towns imaginable, with many of its residents having become traders of goods in varying degrees of legitimacy. When one of these traders is getting married, she decides not to inform Xiao Wu so as not to drudge up old wounds. Inconsolable, Wu meanders around the town, picking up a girlfriend who flees upon finding better prospects and having an argument with his family right before a major crackdown on crime sweeps the streets of the town.