The compass is called zhi nan zhen in Chinese, literally meaning a needle pointing south (South is the primary direction in China, just as north in the West). As a device used to determine geographic direction, the compass usually consists of a magnetic needle mounted or suspended and free to pivot until aligned with the magnetic field of Earth, and a dial. In Chinese classics was mentioned another device for indicating direction, zhi nan che (vehicle pointing south), and legends said it was invented by Huangdi (the Yellow Emperor), the earliest ruler of the Chinese nation. A more reliable record said scientist Ma Jun of the Three Kingdoms Period restored this earlier invention, but it gave little details of the device. Researchers believe the vehicle was equipped with complicated gears and clutches, making it possible that the hand of the wooden figure on the vehicle pointed south wherever the vehicle moved.


The earliest primitive magnetic compass in China, si nan, was probably invented during the Warring States Period, and in several Chinese classics of that period the use of si nan was recorded. The device consisted of a spoon cut out of lodestone and a bronze plate, the surface of both being smooth enough for the spoon to turn easily on the plate, on which 24 directions were marked. To use the device, the spoon was put in the center of the plate and turned slightly. Due to magnetism, the spoon would move around and finally the handle would point south.


But lodestone was not easy to obtain and the spoon and plate were too heavy to carry around. Later inventors artificially magnetized iron needles or iron pieces in other shapes, and developed the magnetic compass that is now usually seen.


Scientist Shen Kuo (1031-1095) of the Northern Song Dynasty writes in his Dream Pool Essays that geomancers pursued their art by rubbing a lodestone against a steel needle, thus causing the needle to point south. Such a needle, he adds, can then be floated on water, put on the edge of nail or bowl, or, best of all, suspended from a thread. He notes further that the needle never points exactly to true south, but always deviates slightly. The knowledge here shown of the principle of magnetic deviation proves almost certainly that the compass had been long known and studied by the Chinese before Shen Kuo's time.


 China was the first country in the world to use the compass in navigation, and its spread to the West had a tremendous impact on world civilization. In the early 12th century the Northern Song government sent a large fleet to Korea. A book that recorded this voyage says that the fleet "observed the Dipper to determine the direction, and when it was overcast the compass was used." The use of the compass ended the dependence on astronomical observation in navigation. In Europe the compass was first mentioned in a French poem of 1190, but its application to navigation was mentioned only later.