Audio Transcript:

JEB SHARP: I'm Jeb Sharp, and this is The World, a co-production of the BBC World Service, PRI, and WGBH Boston. China's Communist Party is planning huge celebrations this week. They'll mark the 60th anniversary of Communist rule in China. The Party's proudest achievements include transforming China's economy into one of the world's biggest. Now, it wants to transform China's economy into one of the world's most creative. Today, we begin a week-long series. It's called �Created in China.� The stories will explore the roots of China's innovative past, and what's being done now to relight that spark. The World's Mary Kay Magistad has Part One.

MARY KAY MAGISTAD: Drive down Beijing's Second Ring Road, and just before you turn toward the Forbidden City, you'll see something incongruous. There, amid the hi-rises and mobile phone ads, stands an ancient stone tower, with ancient star-gazing equipment on its roof. This was China's national observatory for 500 years. Astronomers studied the heavens, at the pleasure of the Emperor. Lu Dishen is a researcher here.

LU DISHEN: In ancient China, celestial phenomena, people pay a lot of attention to it, because celestial phenomena occurring in the sky was believed to mean that something happened to the emperor or to the whole empire.

MAGISTAD: So the masses might see a solar eclipse as a sign that the emperor had lost the favor of heaven, and that might prompt them to try to overthrow the dynasty. Researcher Lu Dishen says that's why the emperor didn't allow just anyone to become an astronomer � only a trusted few.

DISHEN: In China, in some dynasties, if you observed the sky by yourself, you would have been punished to killed.

MAGISTAD: But other scientists had plenty of room to explore new ways of doing things, and over the course of 1500 years, they came up with some of the most important inventions the world had ever seen. The Chinese invented paper, printing, gunpowder and the compass. The created silk, porcelain, Traditional Chinese Medicine, and the seismograph. In the 2nd Century BC, Chinese were already deep-drilling for natural gas and, says researcher Lu Dishen, accurately charting the movement of the planets.

DISHEN: Before the 15th century, Chinese astronomy was the most advanced in the world.

MAGISTAD: The most advanced?

DISHEN: But after that, after the Ming Dynasty to Qing Dynasty, we just followed the Western astronomy.

MAGISTAD: But why? Why was Western science able to overtake China's substantial lead? The question has haunted China for generations. This documentary, �River Elegy�, raised the question when it aired on China's state-run television in 1988. �River Elegy� suggested that since the 19th century, Chinese culture had become stultified, like the Yellow River silting up.

MAN: Is it our history of passive defeat over the past century that has conditioned us psychologically, or decades of poverty and backwardness? The spirit of our people is hurting. The cause of the pain is a civilization in decline.

MAGISTAD: Unlike Western civilization, the documentary said � and it argued that China needed to look to the West for new ideas, like science and democracy. The idea that only the West could save China was something Westerners had been saying about China for much of the 20th century. A more sympathetic Westerner was British biochemist Joseph Needham. In the

1930's he raised the question that came to be known as the Needham Question: why had China lost its innovative edge? Now, some China historians are asking, �Is that even the right question to ask, or did earlier Westerners frame it that way to reinforce a Western feeling of superiority, to justify forcing China to open to trade and modern influences?� Ken Pomeranz is the author of the book �The Great Divergence: China, Europe and the Making of the Modern World Economy�. Pomeranz, who is a professor of Chinese history at the University of California at Irvine, says Chinese innovation did not end with the Ming Dynasty � it just changed direction.

KEN POMERANZ: It is true that there aren't what we might call Chinese mega-inventions on the level of the compass or gunpowder during the Ming. But what, you know, ends up being a mega-invention is often not a question of how innovative it is at the time but of how other people wind up using them.

MAGISTAD: For instance, he says, the early steam engine was a clunky energy-guzzling monster. It could have been dismissed as an interesting but ultimately useless idea. The only way it was worth using was if there was cheap energy nearby. The British figured that out, and used it at the head of coalmines to pump out water and mine coal. With the coal, they could put steam engines on wheels, to form trains. The trains could take coal to factories and power plants. Meanwhile, China was dealing with a different set of issues. It had coal, too, but it was in the landlocked north. That made it prohibitively expensive to transport to where it could have been used by artisans and entrepreneurs. So innovation went not into finding labor-saving devices that used lots of energy, but devices that saved it � like the wok. The wok's thin, curved metal distributes heat quickly, so it allowed the chef to use less of that expensive fuel. There was other reasons why China innovated differently: Europe had lots of land and not so many people. China had lots of people and little arable land. So, Pomeranz says, Chinese innovation went into getting the most out of each acre.

POMERANZ: So the Chinese are, for instance, quite ingenious over the course of the 16th, 17th, 18th and into the 19th centuries, in finding ways of getting more crops out of an acre. They're not that great in maximizing yields per labor hour, because that wasn't a crucial problem for them.

MAGISTAD: So China's innovation tackled different questions from Europe's, and came up with different answers. Ultimately, China did fall behind, but it wasn't because it stopped innovating. What happened is that under the Ming Dynasty, the emperors became less interested in interacting with the outside world and absorbing new ideas. Trade continued on the coasts, but China didn't keep current on the scientific advances happening in other countries. Meanwhile, Europe was going through the Renaissance and Enlightenment and the settling of the New World. Zhang Kaixun, who heads China's Inventions Association, says all this helped Europe pull head of China.

KAIXUN: The Renaissance wasn't about science and technology, it was about art, philosophy and religion, and it created a free atmosphere and open environment for people to think. A free environment is very important for innovation.

MAGISTAD: While Europe was going through the Renaissance and Enlightenment, China was embracing a kind of neo-Confucianism, with a strict hierarchy and code of behavior. It pulled the best minds into becoming mandarins and scholars of classical Confucian texts, rather than merchants and entrepreneurs. That didn't stop innovation, but it didn't exactly encourage it either. There are other possible reasons scientific innovation the Industrial Age took off in Europe, while China's rate of innovation slowed. One is that Europe's many states fought so much they had to keep coming up with new weapons and tactics. The wars prompted many Europeans to live in the relative safety of cities where new ideas spread quickly. These included financial innovations, says Arthur Kroeber, who edits the China Economic Quarterly.

ARTHUR KROEBER: You had the rise of big diversified banking firms, you had the development of insurance which is crucial to enabling to scale up trade in the way that it was previously not possible because you could insure against loss. You had the development of corporations, later stock companies, which enable people to spread risk and become much more entrepreneurial.

MAGISTAD: There were other factors that held back Chinese innovation, too. Wars and political upheaval, throughout much of the 19th century into the 20th. There was a search for new ideas after the last emperor was overthrown in 1912. But war overtook that, too. First the Japanese invasion, then the Communists fight to take power. When Mao Zedong proclaimed the founding of the People's Republic of China in 1949, many Chinese hoped this would be a new start for China in the modern world. What they soon found instead was that Mao wasn't interested in hearing ideas that deviated from his own. He sent hundreds of thousands of intellectuals to prison camps or to their deaths for questioning him. And in the mid-60s, he launched the Cultural Revolution. Mao encouraged teenage Red Guards like these to persecute so-called �counter revolutionaries�. They included intellectuals, those with ties to the West, and anyone whose ideas clashed with Mao's orthodoxy. And yet, Jin Xiaofeng, who's now an internet entrepreneur, remembers it as a time for her, as a pre-teen, of some unexpected freedom.

XIOFENG: My parents were sent to the countryside, and I have no school to go. But that actually allowed me to have a lot of space of my own. I could do something different, creative, and entertain myself, not going through the education system.

MAGISTAD: She says that experience helped her grow up to become a risk-taking entrepreneur. She worries that the young Chinese in school today are under too much pressure, within too much structure, to have the freedom to think creatively. And yet, thinking creatively is what the government says it wants them to do. As it prepares to celebrate 60 years in power, the Communist Party is pushing to make China a more innovative nation. The Party says that's

crucial for China's continued economic growth. There's also something more at stake � China's sense of itself, and its place in the world. There's a hunger to reclaim the respect China once enjoyed, as one of the most powerful and innovative places on earth. The question is how to get there. For The World, I'm Mary Kay Magistad, in Beijing.