A SOLUTION TO THE CHINA PROBLEM

The problem I'm referring to is the question "why didn't the Industrial Revolution start in China in the 14th Century?"

In "Civilization and capitalism, 15th-18th century, Vol. 2, The wheels of commerce", Fernand Braudel suggests that the failure of China to leap ahead of the rest of the world was due in part to its social structure. The ruling class permitted a true market economy but did not allow a true capitalist economy to thrive. Unlike Europe, the Chinese state did not give permanent grants of "privilege" to firms which could be handed down from one generation to the next. This put an upper limit on capital formation and even if a wealthy merchant amassed a fortune, the Confucius-based state sometimes took most of it.