The phrase is structured as a perfect parallel: `(金玉)(其)(外)` meaning “Gold and Jade are its exterior,” contrasted with `(败絮)(其)(中)` meaning “Rotten cotton is its interior.” The combination creates a stark, unforgettable image of deceptive beauty.
The origin of this idiom comes from a famous essay called “The Orange Seller's Words” (《卖柑者言》) by the Ming Dynasty writer Liu Ji (刘基). In the story, the author buys an orange from a seller that looks perfect and shiny but is rotten inside. When he confronts the seller, the seller replies, “Are the officials you see not the same? They look grand and imposing in their high hats and wide sashes, but do they accomplish anything of value? They are all just like my oranges—gold and jade on the outside, rotten cotton on the inside.” This origin story is key. The idiom isn't just about a bad product; it's a profound piece of social and political commentary. It critiques hypocrisy, especially among those in power who maintain a respectable facade while being corrupt, incompetent, and harmful to society. Compared to the Western phrase “Don't judge a book by its cover,” this idiom is far more specific and damning. “Don't judge a book by its cover” can be neutral or even positive (e.g., a plain-looking book might be a masterpiece). In contrast, “金玉其外，败絮其中” is always negative and implies not just a simple mismatch, but a deep-seated rot and moral decay hidden beneath a pleasing surface. It aligns more closely with concepts like a “whited sepulcher” or “a wolf in sheep's clothing.”
This is a literary and somewhat formal idiom. You're more likely to encounter it in writing—news articles, essays, critiques—than in casual, everyday conversation. However, its meaning is widely understood. It's a very strong and direct criticism.