The beginning of chapter seven sees Sun Wukong transported to the realm above to be executed for his rebellion against the primacy of heaven. However, his immortal body proves impervious to blades, fire, and lightning. Laozi theorizes Monkey’s extreme invulnerability is the result of having consumed large quantities of immortal peaches, wine, and elixir that were later refined in his stomach into “a solid single mass”. The Daoist god goes onto to suggest that the demon be subjected to his Brazier of Eight Trigrams (Bagua lu, 八卦爐) in order to separate the elixir and make his subsequently weakened body susceptible to death:
Arriving at the Tushita Palace, Laozi loosened the ropes on the Great Sage, pulled out the weapon from his breastbone, and pushed him into the [brazier]. He then ordered the Daoist who watched over the brazier and the page boy in charge of the fire to blow up a strong flame for the smelting process. The brazier, you see, was of eight compartments corresponding to the eight trigrams of Qian [☰/乾], Kan [☵/坎], Gen [☶/艮], Zhen [☳/震], Xun [☴/巽], Li [☲/離], Kun [☷/坤], and Dui [☱/兌].  The Great Sage crawled into the space beneath the compartment that corresponded to the Xun trigram. Now Xun symbolizes wind; where there is wind, there is no fire. However, wind could churn up smoke, which at that moment reddened his eyes, giving them a permanently inflamed condition. Hence they were sometimes called Fiery Eyes and Diamond Pupils (Wu & Yu, 2012, p. 189).
Laozi checks the furnace forty-nine days later expecting ashes, but is surprised when Sun Wukong emerges and kicks over the mystical oven (fig. 1). This episode has two likely sources.
Fig. 1 – Monkey knocking over Laozi’s furnace (larger version).
I. Master of the Law
The first source is Master of the Law, Tripitaka of the Great Tang, Procures the Scriptures, the earliest edition of Journey to the West published during the 13th-century. The 17th chapter describes the trials of Daffy (Chi na, 癡那), a merchant’s son, at the hands of his evil stepmother Meng (孟). She resents the boy because he stands to inherit all of his father’s wealth, leaving her son with nothing. So she and her handmaiden try to kill the heir by respectively boiling the child in a pot, ripping out his tongue, starving him, and finally pushing him into a river, but each time he is magically saved by heaven. For instance, after four days boiling in the pot, Daffy emerges unscathed and claims:
[T]he iron caldron changed into a lily pad on which I sat, surrounded by the cool waters of a pond. I could sleep or just sit there. It was very comfortable (Wivell, 1994, p. 1203).
Mair (1987) notes the story of a youth being tortured by his stepmother is based on a Dunhuang transformation text with two versions dated 946 and 949, respectively (p. 43). The text focuses on the trials of the future Emperor Shun.  The boiling episode does not, however, appear in the story.
II. Laughing at the Dao
The second source is Laughing at the Dao (Xiaodao lun, 笑道論, 570), an anti-Daoist polemic written as part of a court debate between Buddhist and Daoist representatives vying for state sponsorship. One section recounts Laozi’s rebirth in the mortal world and his later attempt to convert a King in India:
He [Laozi] had (long) hairs on the temples and his head was hoary; his body was sixteen feet tall; he wore a heavenly cap and held a metal staff. He took Yin Xi with him to convert the barbarians. (Once arrived in India) he withdrew to the Shouyang 首陽 mountains, covered by a purple cloud. The barbarian king suspected him of sorcery (妖). He (attempted) to boil him in a cauldron, but (the water) did not grow hot … 
I find this source particularly amusing because the high god of Daoism is in essence subjected to the same punishment as the one he suggests for Sun Wukong.
III. The Furnace in Daoist Alchemy
The furnace has two meanings in Daoist alchemy. The first refers to the physical vessel and stove (dinglu, 鼎爐) combo used in External alchemy (waidan, 外丹) to smelt the elixir of immortality (fig. 2). Kim (2008) describes the various parts and models of this contraption:
The reaction vessel has fire around it (when it is placed inside the heating apparatus), under it (when it is placed over the heating apparatus), or above it (when it is entirely covered by ashes inside the heating apparatus). It may contain an inner reaction-case in which the ingredients are placed. In a more complex model, a “water-vessel” containing water and a “fire-vessel” containing the ingredients can be assembled, the former above and the latter below or vice versa. The vessel must be hermetically closed and should not bear any openings or cracks.
The heating apparatus has fire within it and is often placed over a platform or “altar” (tan 壇). The openings on the wall sides allow air to circulate, while those on the top serve to settle the reaction vessel or to emit flame and smoke. One of the main functions of the heating apparatus is to control the intensity and duration of the heat. (pp. 360-361)
Fig. 2 – An ornate wooden replica dinglu reminiscent of the metal type used in external alchemy (larger version). Fig. 3 – An early 17th-century woodblock print depicting a lidless ding vessel in the lower torso of a Daoist practitioner (larger version).
The concept of consuming alchemically derived elixirs is first mentioned in Discourses on Salt and Iron (Yantie tun, 鹽鐵論, c. 60 BCE). Later, the Token for the Agreement of the Three According to the Book of Changes (Zhouyi cantong qi, 周易參同契, c. 2nd-century CE) standardized the use of toxic materials, such as lead and mercury, for making said elixir, and this idea remained entrenched until the Tang Dynasty (618-907) (Pregadio, 2008, pp. 1002-1003). External alchemy was eventually superseded in popularity by Internal alchemy (neidan, 内丹) from the Tang onward and was still popular during the Ming dynasty (1368-1644) when the final version of Journey to the West was published.
The second meaning is the human body as a metaphor for the furnace (i.e., internal alchemy). The Token for the Agreement of the Three, the aforementioned Daoist text, considers “the 5 organs, 12 vessels, 24 vertebrae, and 360 joints … all part of this body dinglu” (Wang, 2012, p. 192). The corporal furnace, the ingredients (yao, 藥), and the firing time (huohou, 火候) combine to make the “three essentials” (sanyao, 三要) of internal alchemy (Robinet, 2008). The ingredients are yin and yang energy and the firing time is the measured absorption of said energies and the time at which this activity is partaken (Wang, 2012, pp. 192-193). The methods that Sun Wukong use to achieve immortality stand as perfect examples of this process. For instance, he performs breathing exercises after midnight and before noon (in the period of “living qi”) to absorb yang energy. This energy is then purified and circulated throughout his body to power the formation of his immortal spirit.
Monkey’s time in Laozi’s furnace likely borrows from two sources, the story of a child magically surviving boiling in Master of the Law, the 13th-century precursor of Journey to the West, and the story of Laozi magically surviving boiling from Laughing at the Dao, an anti-Daoist polemic of the 6th-century. The latter is humorous as it shows Monkey’s punishment is a recapitulation of the high god’s punishment. Journey to the West presents two forms of alchemy; the concept of Laozi’s furnace refers to “external” alchemy and harkens back to Han Dynasty China when alchemists used such furnaces to fire toxic mercury and lead in an attempt to produce an elixir of immortality; Sun Wukong’s use of breathing exercises and qi circulation is a prime example of “internal” alchemy in which the body is used as the furnace to fire the immortal elixir. External alchemy fell out of favor during the Tang and was superseded by Internal alchemy from then on into the Ming when Journey to the West was published. Therefore, the novel portrays the high god of Daoism as a proponent of the dated external school, while earthly immortals like Monkey are portrayed as proponents of the then current internal school.
Sun Wukong fears the more powerful of his earthly counterparts,  while he gives Laozi little to no respect. For example, when Monkey first escapes from the furnace, “Laozi rushed up to clutch at him, only to be greeted by such a violent shove that he fell head over heels while the Great Sage escaped” (Wu & Yu, 2012, p. 189). This could have been meant as a statement declaring the superiority of the internal over the external.
1) For a complete translation, see Bodman (1994).
2) See Zürcher & Teiser (2007) pp. 299-300 and p. 431 n. 53.
3) One example is his teacher Subhuti.
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Mair, V. H. (1987). Parallels between some Tun-Huang manuscripts and the 17th chapter of the Kozanji Journey to the West. Cahiers d’Extrême-Asie, 3, 41-53.
Pregadio, F. (2008). Waidan In F. Pregadio (Ed.), The encyclopedia of Taoism: Volume 2 (pp. 1002-1005). London [u.a.: Routledge].
Robinet, I. (2008). Dinglu: II. Neidan In F. Pregadio (Ed.), The encyclopedia of Taoism: Volume 1 (pp. 361-362). London [u.a.: Routledge].
Wang, R. (2012). Yinyang: The way of heaven and earth in Chinese thought and culture. Cambridge: Cambridge University Press.
Wivell, C. S. (1994). The story of how the monk Tripitaka of the great country of T’ang brought back the Sūtras. In Mair, Victor H. The Columbia anthology of traditional Chinese literature (pp. 1181-1207). New York: Columbia University Press.
Wu, C., & Yu, A. C. (2012). The journey to the West: Volume 1. Chicago, Illinois : University of Chicago Press.
Zürcher, E., & Teiser, S. F. (2007). The Buddhist conquest of China: The spread and adaptation of Buddhism in early medieval China. Leiden: Brill.