Reading of troy’s piece and twisting the thread heading led me to an article you can find in full here:
http://www.cctv.com/program/Nature&Science/20040826/101274.shtml

This is a series of slightly edited extracts. It tells how the Chinese developed a means of extracting naturally coloured silk from silkworms. After reading the article I am still not clear on whether they were reworking from first principles something already done in Japan or inventing something completely new. Maybe someone knows the answer to that?

“Raising silkworms has a several thousand-year history. Those lovely worms have spun snow-white natural silk. In September 2002, inside a laboratory in Hefei, the silkworms raised by researchers spun natural silk in colours, from simple white to all the colours of a rainbow. This meant the complicated traditional silk printing and dyeing process was done biologically inside the silkworms. If this technique is popularized, the traditional silk industry will have a revolution and there will be a saving in raw materials and water pollution.
In September 2001, Fan Jiuge, the chief of the institute, was sent to Japan for a survey. There, for the first time, he saw domestic silkworms spinning natural silk in colours. The cause of it, he learnt, was a dye in the feedstuff for the creature. It seemed a simple practice, but proved very difficult.
Few people ever give a thought to the question, why silkworms take green leaves but spin white silk? The answer is in a biological membrane between the gland and digestion system. The dense membrane is able to withhold dye molecules from passing.
A vehicle was needed to bring the dye into their glands. After much research, Fan believed dye molecules were too big in size.
Fan decided to make a “bridge” with a chemical radical. One end of it served as a hook for silk, and another was the stuff easily penetrating into the glands. When the radical got in, it brought the dye along. (If you understand that, good luck!)
On July 27, 2002, their silkworms began to make red cocoons. The silk didn’t fade. This meant the dye had entered the interior of the silk. Fading had been a big problem in silk printing and dyeing. Dye had been unable to penetrate and left the colour unstable.
Yellow and blue cocoons were made after red ones. The three basic colours were done.
On September 7, 2002, purple cocoons were made, the first colour through mixing dyes. This test proved that dyes from different colours could make a new one inside silkworms.
Raising silkworms in China has entered a new era.