Hsiao Ch'ien was born into a sinicized Mongolian family in Beijing, China, in 1910. His father died before his birth and his mother died when he was seven. In 1931, he enrolled at Furen University where he and a young American named William Allen founded the English magazine China in Brief. In 1933, he entered the Faculty of English at Yenching University but switched to the Faculty of Journalism later that year before graduating in 1936.

In 1939, just before the Second World War broke out, he travelled to England to teach Chinese at the School of Oriental and African Studies and serve as a foreign correspondent for Takung Pao. After the outbreak of war, he also served as a war correspondent. SOAS relocated to Cambridge during the Second World War so, after spending one night in London, Hsiao Ch'ien went to Cambridge. He was classified as an 'enemy alien' by the Home Office but this changed after the Japanese bombed Pearl Harbor and the Chinese became members of the grand alliance.

The BBC chose Hsiao Ch'ien to report back to China about the European war and the war effort of the English. Around this time, he became good friends with Mulk Raj Anand and supported the Indian call for independence. He voiced his support for the Indian cause in his weekly BBC broadcast but the censors deleted it before it went on air. Later George Orwell, who was head of the BBC's Far Eastern Division, invited him to do several special broadcasts to the Indians and Americans, but strictly on the subject of literature.

SOAS moved back to London in July 1940 and Ch'ien took up residence in a house that catered especially to Asians; he shared the ground floor flat with a Tamil named Rajarantu, who later became the first deputy premier and foreign minister of Singapore. In wartime London, Hsiao Ch'ien socialized with Bloomsbury Group affiliates like Bertrand Russell, Leonard Woolf and E. M. Forster, with whom he became close friends. According to his autobiography, he first met Forster at the PEN Club memorial meeting for Rabindranath Tagore held on 9 May 1941. However, according to India Office files, this meeting was hosted by Krishna Menon and the India League. The speakers were Edward Thompson, Hewlett Johnson (Dean of Canterbury), Nagendranath Gangulee (Tagore's nephew), Beatrix Lehmann (actress), Bhicoo Batlivala, Helen Kirkpatrick (Chicago Daily Tribune) and M. Maisky (Soviet ambassador). Other attendees included Mulk Raj Anand, Tahmankar, Sunder Kabadia, Krishnarao Shelvankar, Alagu Subramanian, Iqbal Singh, Sasadhar Sinha and Asha Bhattacharya led the singing of Tagore's songs.

In June 1944, Hsiao Ch'ien became a journalist for Dagongbao and set up an office in Fleet Street, London. Soon afterwards he was sent to France and other parts of Western Europe as a war correspondent; he covered the meeting of the United Nations in San Francisco, and attended the Potsdam Conference in July 1945.

Hsiao Ch'ien returned to Shanghai in 1946 and took up writing. He was considered right-wing by the Chinese government and banished to the countryside but later received redress. He died in 1999 in Beijing.