The problem with the explanation that tells you more about David Landes than about either China or Europe. Kenneth Pommeranz does a pretty good job in the great divergence at demolishing cultural explanation for China’s lack of industrialization.
As far as what I think is the reason. Look at the clothes you are wearing right now. They were not made in the factories of Europe but rather in the textile mills of China using massive amounts of cheap labor. One thing that China has done in the last few years is caused a massive deindustrialization in the world, as what used to be made with high capital industrial processes in the developed world, are now made with labor-intensive processes in China.
If the Chinese economy is causing a partial reversal of the industrial revolution *now*, then this suggests why the economic forces in China never caused an indigeneous industrial revolution in the 1800’s.