When Young Wu, a young Chinese boy, and his grandfather are captured by invading Arabs, they win their freedom by promising their captor, the Sultan of Samarkand, that the old man can ``make clouds.'' They are given seven days to produce this miracle, pounding their soaked hemp shoes into fiber, using wood ash and hot water, then drying the solution they've made on a frame made out of the grandfather's cane and a worn sack. When they finally produce the dried piece of paper, the boy proclaims it a cloud as it drifts through the air. The Sultan recognizes ``the cloud'' as paper, and is eager to learn the secret of paper-making for his own people. A historical note helps young readers make the leap between folklore and fact: Based on an Arab legend, the story recounts a battle the Chinese lost in a.d. 751. Lyrical watercolor paintings perfectly complement the spare, engaging text. (Picture book. 5-9)