There is no evidence that this form of torture was ever used by the Chinese. The popularity of the term "Chinese water torture" may have arisen from Harry Houdini's Chinese Water Torture Cell (a feat of escapology introduced in Berlin at Circus Busch September 211912 ; the escape entailed Houdini being bound and suspended upside-down in a locked glass and steel cabinet full to overflowing with water, from which he escaped), together with the Fu Manchu stories of Sax Rohmer that were popular in the 1930s (in which the evil Fu Manchu subjected his victims to various ingenious tortures, such as the wire jacket). Hippolytus de Marsiliis is credited with the invention of a form of water torture. Having observed how drops of water falling one by one on a stone gradually created a hollow, he applied the method to the human body. Other suggestions say that the term, "Chinese Water Torture" was invented merely to grant the method a sense of ominous mystery.
"Victims were strapped down so that they could not move, and cold water was then dripped slowly on to a small area of the body. The forehead was found to be the most suitable point for this form of torture: prisoners could see each drop coming, and after long durations were gradually driven frantic as an increasing hollow would form in the centre of the forehead."
The Norse legend of Loki may have also been an inspiration for the Chinese water torture. Loki, who was punished by the gods for murdering Baldr, was strapped to three slabs of stone, and had a snake placed above him, so that its venom would pour into his eyes.
The key part of this is that the water drop was made to be randomly timed. Thus, the victim would not know when the next drop would come.
The Falun Gong claims some of its followers have suffered this torture in China. Exhibits of this form of torture may also be seen in Vietnamese prison museums, particularly in Ho Chi Minh City's Warcrime museum. Another source mentions its use against student demonstrators in Tunisia. In both cases, the torture is used along with other techniques, and is rarely the worst.