Penguin Classics has published a collection with all of Lu Xun's fiction stories. Highly recommended. Xiao Hong is another notable writer from the same period.
From more recent writers Mo Yan, who won Nobel Prize for literature, is also worth checking out.
Seconded, Mo Yan is a great writer and most of his humour is earthy enough to come across well in translation. Xiao Hong, on the other hand, is grim. She's been on my shelf for a decade and I still can't finish the book.... it's soooo unremittingly depressing.