Jaws drop. Some stare in awe. Others point and laugh. And some shake their heads and snicker.
But Chao, who is biologically male but identifies as "gender fluid" and goes as "she," is used to it. She says a common question she gets from strangers is "Aren't you ashamed of yourself?"
She's one of the few transgender people in China who isn't afraid to live their lives openly and proudly.
It's been 20 years since the Chinese government decriminalized homosexuality -- and 16 years since it was declassified as a mental disorder.
While China's law allows transgender people to change their gender on ID cards, the procedures are difficult and only accessible to those who have gone through full sex-reassignment surgery.
In addition, gender change is not allowed on many official documents, such as university degrees and other education certificates.
This creates obstacles for transgender people in accessing employment and pursuing higher education.
But talk of gender identity and sexual orientation is still a touchy subject, especially among families.
Chao's gender identity isn't something her parents discuss with others.
"They just stay silent when people ask questions about my personal life. I'm not sure if they can deal with the pressure brought on by society," she says.
Chao has also had friends suggest she go back to living as a man. Chao says she was once detained by security guards after using the ladies' restroom in a Beijing shopping mall. The cleaning lady reported her and called her a "pervert," she recalls.
Chao Xiaomi sits on a toilet with a toliet paper roll, which says "No embarrassment in bathroom and be convenient for everyone," to advocate establishing gender-friendly bathrooms in China (photo on left).
Chinese law does allow people to change their gender on ID cards but only for those who have undertaken sex reassignment surgery -- something Chao isn't ready to do yet.
Dress for success
Chao owns a vintage dress shop in Beijing's ancient Drum Tower area. She shot to fame after appearing on a debate program on Chinese TV last year to defend LGBT people and their rights.
"I love her elegant appearance, which attracts people who aren't aware of the issues, and more importantly I love her self-respect," said Qian He, who became a fan of Chao after seeing her on the debate program -- and traveled more than 1,200 kilometers from her home in Hangzhou to visit her in Beijing.
Chao expresses what she says is her true identity through her wardrobe -- an array of elegant designer dresses from various continents and eras.
One day she may dress like a European aristocrat complete with long sleeved black velvet gloves and a fascinator on her head with large plumes of feathers sticking out.
The next day, she's a classic Shanghai lady wearing a traditional figure-hugging qipao or cheongsam, popularized in China in the 1920s.
At her dress shop, she sells clothing that she hopes will help others in the LGBT community express themselves. She's also designed a few vintage-style dresses that she's put up for sale.
"You need to pour a lot of emotion into each vintage dress you design," she says.
Chao Xiaomi poses in a hand-made white lace dress from Taiwan.
Chao says she's found China's young people are more open-minded and accepting of her -- and that's helped her self-confidence.
In the past, she's had some people from the older generation yell "yaojing" -- meaning "evil spirit" -- when they saw her. But not all of the older generation have been so harsh.
When CNN filmed with Chao, an elderly woman in the neighborhood asked "Is that really a man? Wow. He can walk in heels better than I can. He's awesome!"
And it's that kind of more open attitude Chao hopes she can encourage others to have when it comes to LGBT issues.
But LGBT activists say there's still a long way to go in educating much of China's conservative society.
"People's don't pay much attention to them or even acknowledge their existence," said Xin Ying, from Beijing LGBT Center. "Every sexual minority who has attended our organization's activities tells me going to a public toilet is a nightmare."
'Edge of society'
Although Chao has come out to her parents, she says they face pressure from others who aren't aware, and her parents are constantly questioned why their son is still single. Most of Chao's former classmates are married with children.
Friends of Chao's parents have even tried to set her up on blind dates with women, but she tells them she'd rather focus on building her career than having a relationship.
"They tell me 'you can't be so selfish. Your parents are waiting to hold a grandchild in their arms,'" she explains.
But Chao says she's not afraid of the tough road ahead -- and she's using her vintage clothing shop to help other LGBT people -- hiring some to work in the store, and donating a portion of her income to LBGT support