That is a damn good question that historians still argue over today.
The short version is that the Song dynasty appeared to have all the precursor technology needed for industrialization by the 12th century, but then just didn't. The most commonly held view is probably that society and economics is as important than technology, and that while they at that point had the kind of metallurgy that Europeans could only dream of until the late 18th century, what they didn't have was labor shortages and capitalism, which were what made industrialization something people wanted to actually do. But this is by far not the only proposed explanation.
In general, because of the recent history of the west appears like it, I think we are far too predisposed to view of development as a linear progression towards something, that history has a direction, and that direction is up. For most of history, for most societies, this hasn't really been true. As many societies have spent as long stagnating or even regressing as have advanced. It's just that so long as one advances, eventually it's going to influence it's neighbors, either by taking them over or by having them frantically play catch-up to not be taken over, and so the whole thing has a direction.
This leads to my pet theory for why Europe: Because Europe has managed for almost the entirety of it's history to avoid being conquered by a single empire, so everyone was always afraid of their neighbors, yet there was a solid enough foundation of international law that everyone wasn't at war with all their neighbors all the time. This created both a backdrop that forced states to push to be more powerful, even over entrenched interests, and the conditions where the best way to do this often enough wasn't beating up your neighbors and taking their stuff.