It is believed that the idea of “a round heaven and a square earth” had played as a domain cosmology in ancient China. The earliest record of this idea appeared in a text compiled in the first century AD, which recorded a dialogue between two thinkers of the fifth century BC doubting this idea. After that though often under critics, this idea appeared in more and more literatures. Modern historians of Chinese astronomy all believe it to have had existed, too. The present article set forth that the idea of “a square earth” had never existed in ancient China. In Chinese, the word fang, which is interpreted as “square” in this context, has another meaning as “direction, orientation, or locality”, etc. Since in the 13th century BC oracle bone inscriptions the word fang has the later meaning only, the original meaning of fang had no meaning of “a square”. Archaeological discoveries show that from the mid Neolithic period (c.a. 3500 BC) on, almost all important cultures of Chinese civilization began to pay great attention to directions. Buildings such as altars, city walls, palaces, began to orient to the four cardinal directions intentionally. In the late Neolithic Taosi Site a ritual observatory was found which had been designed carefully for observing the sun’s rising from different directions at different seasons. Establishment of the four cardinal directions as spacial coordinate system on the ground must have been based on astronomical observations. In traditional Chinese cosmology different directions corresponded to different seasons, different colors, different elements, and different virtues, etc., which formed the foundation of Chinese ideological and political idea. So “A round heaven and a square earth” had no room to come into existed in Chinese history, in stead, it must be interpreted as “a round heaven and a orientable earth”, which reflected the special period when Chinese people began to establish direction system on the ground and orient important buildings by astronomical observations.