Cai Xiaoqian was born in Huatan, Changhua; the sources give his birth year variously as 1904, 1906 or 1908. In the 1920s he gave up teaching for Shanghai, enrolled at Shanghai University and helped organise the Shanghai Taiwanese Youth Association. Back in Taiwan he worked with Wang Minchuan and Lian Wenqing to bring the Taiwan Cultural Association under the left. He later went to China and marched with the Chinese Workers' and Peasants' Red Army on the Long March, the only Taiwanese to complete it.

In 1946 he was sent back to Taiwan to build the Chinese Communist Party's Taiwan Provincial Work Committee, and served as its secretary. By around 1950 the branches and members it had developed across the island made it the largest underground organisation in postwar Taiwan.

He was arrested in 1950 by the Ministry of National Defense's Bureau of Secrecy. Under interrogation, he gave up the lists. The mass arrests that followed began from those lists: Zhong Haodong at Keelung Middle School, the base in the Luku hills, school and factory branches all over the island, taken one after another. Thousands were arrested, sentenced, or shot.

He was not shot himself. After turning he joined the Kuomintang, was promoted to major general in 1956 for intelligence work, later became deputy director of the Ministry of National Defense intelligence bureau's research office on communist affairs and deputy director-general of the Investigation Bureau, and died on 8 October 1982. Through the densest years of the White Terror he stood on both sides of the list.