Gracie quit her post earlier this month in protest at the discrepancy between her pay and that of male counterparts, going public with her grievances to try to jolt the public broadcaster into addressing unequal pay.
"You know we are not in the business of producing toothpaste or tyres at the BBC. Our business is truth," an emotional Gracie told the committee of MPs, who are conducting an investigation into BBC pay.
'We can't operate without the truth. If we're not prepared to look at ourselves honestly, how can we be trusted to look at anything else in our reporting honestly? It just won't do. It can't be a starting place to not deal with the facts."
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BBC denies gender bias as staff reveal pay
Gracie's revolt laid bare tensions simmering within the BBC since it was forced last July to name its best paid on-air staff, revealing that two-thirds of them were men of whom several were far better paid than female peers.
"They're not living in the same values as the rest of us. It makes me angry. It makes me disappointed," she said.
"It makes me desperately anxious for the future of the BBC. Like I say, you know, if we're not truth tellers who are we? We're no better than the next news source. I mean the BBC lives or dies by its reputation for telling the truth without fear or favour. That is what we go out and do every day. And that is what our bosses should do."
BBC managers deny there is systemic gender discrimination on pay. Director-General Tony Hall and other senior executives are due to appear before the committee.
On Tuesday, the BBC published a review of on-air staff conducted by PwC which found no evidence of gender bias in decision-making on pay.
BBC Women, a group of 170 staff, rejected the PwC review.
Gracie, who has reported on China for three decades and speaks fluent Mandarin, explicitly demanded equal pay when appointed as China editor in late 2013. She assured her demand had been met.
Last July she discovered that she was paid significantly less than her two direct male counterparts.
Gracie told the MPs she had been offered a hefty pay rise but turned it down because her fight was about ensuring the BBC changed its practices and delivered equal pay for equal work for all men and women.
She said in the five months following the pay disclosures, she had sought redress internally but had run up against obfuscation from management.