Growing up in rural Hebei province in the 1970s, Henry Wu knew one thing for certain: He didn't want to end up as the guy who cleaned the very basic village toilet, a putrid ditch that had to be dredged each day.

Teachers in Mr. Wu's village of Jiedi used to threaten students who didn't study hard with the possibility of such employment if they didn't get serious about school. Mr. Wu was never in danger, winning provincial competitions in math and physics and earning a scholarship at prestigious Beijing University.

Mr. Wu has since used his talents to make the job of cleaning the facilities in Jiedi a little easier. He devised a waterless, self-cleaning portable toilet a few years ago that is now being installed in public places across China, a country combatting epic shortages of both water and clean latrines.

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"I felt it was time for a toilet revolution," Mr. Wu says of his decision a decade ago to abandon a career as a stock trader to focus on building a better loo. "It was time to invent something cleaner. Something pollution-free."

He succeeded. More than 10,000 "Landwasher" toilet units have since been installed around China, including three portable facilities outside the gates of the Forbidden City in Beijing that have been painted dark red to blend in alongside the graceful walls of the 600-year-old imperial palace.

And Mr. Wu's little start-up company – he had to borrow cash from his father to get it going – was this year named one of the world's "most innovative" firms by Fast Company magazine. It's a nod to how important better hygiene in China could be for an outside world that imports everything from children's toys to frozen food from the Middle Kingdom.

Best of all, there is now a row of Landwashers even in Jiedi, where teachers are presumably having to come up with a new terrible job with which to frighten lazy students.

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Mr. Wu says he's working on a cheaper model of the Landwasher – which currently sell for between $5,000 and $8,000 for a row of four separated toilets, plus a men's urinal – to make it more affordable to other local governments in China and, eventually, India, where the sanitation problems are even greater.

Mr. Wu's supertoilet is a simple concept, using pee to flush poo, mixed with some impressive engineering. The outhouse is computerized, and keeps track of how long a visitor has been inside. It then draws a conclusion about what they were doing there, and opens one of two valves.

Solid waste is broken down by a whirring blade and deposited in one holding tank, while urine is sent to another. Small amounts of disinfectant are then added to the liquid before it's recycled the next time somebody flushes.

It may sound somewhat messy, but the squat-style Landwasher toilets outside the Forbidden City – where the underground sewage system is too old to handle the tourist hordes – are remarkably clean and odourless given that they serve some of the 130,000 people who line up to buy tickets every day.

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Landwashers spare the six litres of water per flush that the average toilet uses – a crucial saving in China, which is currently spending billions of dollars trying to reroute freshwater from rivers in the south of the country to parched Beijing and the north. "If every Chinese family had flush toilets, all the water in the Yangtze River wouldn't meet the need. As China's urbanization accelerates, the water crisis will get worse and worse," Mr. Wu said.

The supertoilet also saves villages like Jiedi from having to install sewage systems; while China has dramatically improved sanitation standards over the past two decades, the World Health Organization estimates 14 million Chinese still defecate in the open.

Toilets have evolved as humans have become both wealthier and more aware of the importance of sanitation. Dry toilets have been uncovered in the tombs of Chinese kings dating back as far as 200 BC. The first flush toilet was designed in 1596 for Queen Elizabeth I, and they became widespread in Europe and North America starting in the late 19th and early 20th century as the linkages between poor sanitation and the spread of disease became clearer.

And now there's a global effort to develop a new toilet that will use less water and be affordable to poor communities that don't have sewage systems. The Bill and Melinda Gates Foundation has offered millions of dollars in grants to those trying to design the "toilet of the future."

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Mr. Wu sees his toilets as his personal contribution to China's rapid development.

"To see how a country's economy and civilization are advancing, you have to look at the things underneath," Mr. Wu says. "If a city looks beautiful, but their public toilets are dirty, that means the city belongs only to the rich."