小说(xiǎo shuō) - novel, fiction in Mandarin

小说 (xiǎo shuō) is fiction: novels, novellas and short stories all fall under it. Length is specified when it matters, with 长篇小说 for a full novel and 短篇小说 for a short story. The measure word is 本 for a physical book and 部 for the work itself.

The reading verb is 看 rather than 读 in ordinary speech, so 我在看小说 is what people actually say. Genres attach in front: 爱情小说, 侦探小说, 科幻小说.

The trap is treating 小说 and 故事 as the same thing. 故事 is a story in the abstract, something you can tell out loud, including your neighbour's account of her weekend. 小说 is written fiction with an author. The dismissive undertone of the original "small talk" has long since gone, so calling something 小说 is not an insult, but describing a true account as a 小说 does imply you doubt it.