Science in Traditional China, Joseph Needham (Harvard University Press, 1981). There’s an old trope that the Chinese invented gunpowder and had it for six hundred years, but couldn’t see its military applications and only used it for fireworks. I still see this claim made all over the place, which surprises me because it’s more than just wrong, it’s implausible to anybody with any understanding of human nature.
I'm sure you're aware of the book "Escape from Rome" by Walter Scheidel. Scheidel argues that the advantage Europe had was that its geography led to political fragmentation into smaller states in the aftermath of the dissolution of the Western Roman Empire; whereas China consistently reunified after periods of political fragmentation due to its geography and homogeneity. It's not as simple as "big state squelches innovation," which is--no surprise--popular with libertarians*. Rather, that political fragmentation unleashed interstate competition on a greater scale than in China, which was spared those competitive energies due to its size and centralization, which led to more innovation in Europe. In Europe, for example, if one state innovated militarily, other states had to keep up if not improve on those techniques. Small states like the Dutch Republic had to be innovative (e.g. finance & banking) to compete with more powerful states like Spain. If one country didn't want to send out sailing ships to explore, another one would, and so on. I have not yet read the book, so I can't speak to how good its argument is, but it's one that has been made many times even before Scheidel.
As for the conceptual difference, are you familiar with "The Master and His Emissary" by Dr. Iain McGilchrist? What you're describing as Chinese thought--the idea that nothing can be understood except in the context of the whole--is associated with the way the right hemisphere of the brain (which controls the left side of the body) sees the world. The idea of breaking the world down into isolated component parts and using instrumental rationality is associated with the Left hemisphere of the brain (which controls the right side of the body). McGilchrist argues that both ways of perception are necessary and that we need both, but we run into trouble when one hemisphere becomes dominant to the exclusion of the other. He argues that one of the characteristics of the left hemisphere is an inability to see its own limitations and it often suppresses the activities of the right hemisphere (the 'Master' and the 'emissary' in his depiction.) Furthermore, cultures and historical periods can be understood in terms of which way of seeing the world predominates. It's a magisterial work of 1,000-plus pages, so any summary is, of course, inadequate. There's a popular RSA animation which provides a summary: https://youtu.be/dFs9WO2B8uI
* Of course, historians have shown that Great Britain, where the Industrial Revolution began, had a strong centralized state which could do things like protect property rights, issue patents, hold contests to develop technologies for its navy, and so on; and that--contra libertarianism--strong states foster innovation whereas weak states do not.
Perhaps the paradox of China's eclipse can be explained through more humdrum political events, particularly the divided nature of the European population, which would militate against any force that might slow technological growth. Hard to see how the French could have burned their treasure fleets in the same way that the Chinese did. The fact that so many European countries were so constantly at war with one another, particularly the Thirty years war, naturally drove innovation, particularly military innovation. Paradoxically, one could argue that the generally unified state of China was advantageous until it ceased to be so due to its monopoly on technological growth and its ability to forestall it whenever necessary.
Additionally, there is the issue of Chinese characters and how much more challenging it is to create a printing press to spread literacy and ideas in this sort of environment.
The story of early progress followed by relative stagnation occurs in unexpected places. Chess originated in India and evolved into various forms across Asia and Europe. The Chinese version is xiangxi. I once saw a xiangxi game from the 1300s written up in a chess column in the Spectator, and it was far more intricate and clever than any medieval European game of chess I had seen (indeed, very few games of European medieval chess were recorded). In the 17th century there were a couple of really good xiangxi anthologies, The Secret Inside the Orange (1632) and The Plum-Blossom Meter (end of the 1600s). Since then, very few books on xiangxi have come out (so says my copy of Chinese Chess by H.T. Lau, published by the Charles E. Tuttle Company (Rutland, Vermont and Tokyo, Japan) in 1985). As far as I can tell, xiangi is still being played more or less the same way as it was in the Ming Dynasty. Meanwhile, the literature on European chess went from a trickle in the 14th-18th centuries to a torrent in the 19th and a flood in the 20th, and chess eventually became the domain of computers and now AI (see Game Changer, Matthew Sadler and Natasha Regan (2019)). There have been multiple waves of new strategies and techniques developed over the past 200 years. In recent years the Chinese have taken their place among the best in the world at the upper reaches of the Western game, though I understand it's not very widely played by the Chinese masses. And there's probably some idiot somewhere who thinks that Chinese skill at the Western game is further proof that they're just skilled imitators.
Your idea sounds a bit like James Burke's in the series Connections (Episode 3)
A book that seems relevant to your theory about Chinese vs Western science is “The Rise of Modern Science Explained: A Comparative History” by H. Floris Cohen, who goes into some interesting details about these differences as well as differences within different traditions in Europe and China
Didn't the ancient Greeks also have the idea/ideal of nature as separate? I agree that the idea exploded with the Reformation, but I think it was already important. But I like your analysis, sometimes a separate nature is useful, sometimes a hinderance. Daoists pioneered the idea of each individual having a unique nature, though not separate--connected in infinitely unique ways.
On the Needham Puzzle, I think it is making the assumption of science over technology. Industrial commerce started with antique markets in Song China, progressed to ceramics sold on treasure ships, was curtailed but re-emerged in the 1590s at the time trading with Europe exploded, in the form of ceramics, nails, printing, silk, etc... It was the wars that established the Qing Dynasty which retarded industrial commerce at the very time it began in Europe. After the invention of the steam engine which was first used in mines and metallurgy, industrial commerce exploded.
Science was more of a consequence of commerce and technology than the other way around.
Also, Bibical time was replaced by scientific time only after encountering the Chinese alternative timeline in the letters of Matteo Ricci (probably a gay Jewish convert, but that is another story). Great stuff, thanks for letting me share my theories!
Great thinking incarnated by great writing. Bravo.
I read some time ago a theory that the Chinese fell behind because they failed to develop optics and the lens, so no microscopes or telescopes, or spectacles. I do like the idea that their holistic belief in harmony versus the West’s post Reformation pursuit of analysis is key, and that in fact now the pendulum may be swinging the other way, from ever tinier particles back to waves and fields.
Simon Winchester has a bio about Needham that makes for a pretty good audiobook (like most Winchester joints because he narrates), although he unsurprisingly defended Needham's Communist sympathies
An interesting aspect of Chinese cosmology is the Yijing which is often used in precisely the way you propose in your answer to the Needham question: a method to eliminate unpredictability from the cosmos by incorporating it into a unifying order, in which yin always swings back to yang, disharmonies tend to resolve themselves and so on. I believe this was part of Needham's claim about the cyclical nature of time in China.
An interesting aspect of this is that Han dynasty elites were aware this was a psychological illusion! They consciously invented a more complex text, Taixuanjing, in order to more effectively manipulate their cognitive processes and heighten the creativity produced from randomness. However the Neo-Confucian/Zhu Xi school, which as you've noticed was 1500 years later and therefore a different ethnic background, had completely forgotten this more agnostic hermeneutic and started to consider the antiquity of the Yijing as proof of its sanctity and authority. Their devotion to antiquity was therefore hardening at precisely the time when Europe was, for better or for worse, escaping inherited assumptions about the natural world, justice, economics and so on.