In Bad Samaritans: The Myth of Free Trade (2007) and Kicking Away the Ladder (2002), Ha-Joon Chang challenges the conventional narrative that wealth is built through strict adherence to free-market principles. He argues that historically, rich countries became prosperous not by following liberal economic rules but by actively intervening in their economies—through tariffs, protectionism, subsidies, and other state-led policies—to nurture industrial strength. Once these nations achieved economic dominance, they promoted free-market policies globally, effectively “kicking away the ladder” that had enabled their own development. Applying Chang’s logic to contemporary China, the global economic system did not prevent China from industrializing, but it was structured to slow, narrow, or shape the ways in which China could climb the value chain, particularly as it began challenging incumbents in high-value sectors, exemplified by initiatives such as “Made in China 2025.”
The Climb China Required and the Global Rules That Constrained It
Historically, the wealthiest nations advanced up the global economic ladder by strategically protecting their nascent industries, imitating and mastering foreign technologies, directing state finance and industrial policy, and managing trade and capital flows. Britain, the United States, Germany, Japan, and South Korea all relied heavily on such measures during their takeoff phases, using them as critical instruments to develop domestic capabilities and ascend the value chain.
China followed a similar path, leveraging these very tools to drive its remarkable economic rise. Yet the critical difference lay in timing. Unlike its predecessors, China undertook this climb within a global economic system that had largely redefined these strategies as “unfair,” “distortionary,” or outright illegal. This created a profound tension: the ladder China needed to achieve rapid industrialization and modernization existed, but the rules of the international system constrained how freely it could climb. The contradiction between developmental necessity and global regulation has shaped much of China’s economic strategy and the debates surrounding it.
WTO Rules and China’s Constrained Ascent in Global Value Chains
When China joined the World Trade Organization in 2001, it accepted obligations that were unusually stringent compared with the historical experience of early industrializers. The country had to rapidly slash tariffs, open domestic markets, and adhere to strong intellectual property rules—standards that earlier industrial powers like the United States and Britain had faced only after achieving global industrial dominance. This asymmetry placed China in a position where it could efficiently export manufactured goods, yet its path into high-margin, protected sectors was inherently constrained.
At the same time, developed countries employed a strategy of tariff escalation. They imposed low tariffs on raw materials and basic manufactured goods but maintained high tariffs and non-tariff barriers on processed, high-value products. This approach effectively signaled that while China could participate in assembly and basic manufacturing, moving into advanced electronics, high-tech machinery, or other high-value-added industries would be far more difficult.
The combination of aggressive domestic liberalization and protective measures abroad created structural limits on China’s economic trajectory. It cemented the country’s role as an assembler and contract manufacturer within global value chains dominated by foreign firms. Rather than allowing a natural progression toward higher-value sectors, the WTO framework and the tariff strategies of developed countries collectively locked China into low-value production roles, shaping the contours of its industrial development for decades.
Global Value Chains: Control Without Ownership
Globalization did not create a level playing field for competition; rather, it entrenched hierarchical global value chains. Firms in developed countries maintained control over the most critical and lucrative aspects of production—branding, design, core technology, industry standards, and distribution networks—while outsourcing labor-intensive or low-margin stages to developing countries.
China’s integration into these value chains largely occurred at the assembly and basic manufacturing stages. Even as Chinese firms increased productivity and efficiency, the bulk of profits continued to accrue to multinational corporations such as Apple, Intel, Siemens, and Boeing. Local assemblers and suppliers, despite contributing significantly to production, captured only a fraction of the economic gains.
This dynamic illustrates a broader principle highlighted by economist Ha-Joon Chang: free trade does not simply reward productivity; it rewards control over the “commanding heights” of the value chain. In practice, this meant that China—and other developing economies—could participate in global trade without ever commanding the most profitable segments, leaving the control and rewards firmly in the hands of foreign firms.
Intellectual Property Regimes: Freezing the Tech Frontier
The establishment of the WTO’s TRIPS agreement introduced stringent global intellectual property protections, fundamentally altering the rules of technological development. Under these regimes, practices that were once central to the rise of today’s industrial powers—technology imitation, reverse engineering, and selective copying—became illegal. Patents and IP rights were extended worldwide, restricting developing countries from using these traditional pathways to catch up.
Historically, nations such as the United States, Germany, Japan, and South Korea relied on copying and adapting foreign technology to fuel their industrial ascents. In contrast, China faced legal and economic barriers when attempting similar strategies. Efforts to move into higher-value technological sectors risked lawsuits, sanctions, and blacklisting. This represents a textbook case of “kicking away the ladder,” where the mechanisms that enabled past industrialization are denied to latecomers, effectively freezing China—and other developing economies—at the frontier of technology controlled by advanced countries.
Financial Globalization: Discipline Without Development
Global financial institutions and markets, including the IMF, have long promoted capital mobility, financial liberalization, and market-driven investment decisions. While these mechanisms are framed as enhancing efficiency, they often overlook the historical prerequisites for industrial development. Successful industrialization typically required directed credit, patient capital, and robust state banking systems—tools that allowed governments to nurture strategic sectors over the long term.
China’s cautious approach to financial liberalization helped it retain some policy space, yet external pressures were relentless. Moves interpreted as “state distortions,” including industrial policies like Made in China 2025, frequently provoked international criticism or even containment measures. Unlike earlier industrializers, which benefited from such interventions, China faced pushback for employing the same strategies, illustrating how financial globalization enforces discipline without providing the developmental support historically necessary for technological upgrading and industrial growth.
Standards, Regulation, and the Politics of “Fair Competition”
As China approached the technological frontier, the global battleground for economic competition shifted. What was once framed around tariffs and price competition increasingly became a contest over standards, security, trust, and governance. The focus moved from straightforward economic rivalry to a more complex interplay of geopolitical considerations, reflecting the strategic importance of technology in the modern world.
Western-led standards bodies, export controls on advanced technologies such as semiconductors, and stringent investment screening regimes have emerged as key mechanisms in this new environment. While these measures are often presented as neutral and rule-based, they disproportionately disadvantage latecomers attempting to enter high-tech markets. The discourse of “fair competition” thus serves not only as a regulatory framework but also as a strategic instrument to maintain technological dominance.
This pattern reflects a long-observed dynamic described by economist Ha-Joon Chang: rules and norms evolve in ways that favor incumbent powers once new competitors begin to challenge the status quo. What appears as impartial regulation is often shaped by underlying strategic interests, demonstrating how standards, governance, and security narratives are increasingly leveraged to control access to frontier technologies and shape global economic hierarchies.
When the Double Standard Becomes Visible: China and the Shifting Rules of Development
The double standard in global economic governance becomes strikingly visible when examining China’s development trajectory. As China attempted to follow free-market rules, international observers urged it to liberalize further, insisting that its reforms were insufficient. Yet, when China adopted a state-led development strategy to accelerate growth, the same actions were condemned as unfair or illegitimate.
What is particularly revealing is that even when China succeeded economically despite these criticisms, the standards appeared to shift once again. Success did not earn recognition; instead, it provoked new rules and fresh scrutiny. This pattern is not merely a matter of perception—it reflects a structural inconsistency embedded in the global economic system, where the rules are applied differently depending on who is playing and how outcomes challenge established norms. China’s experience thus exposes the fragile and selective application of the principles it was asked to follow.
Climbing a Damaged Ladder: China’s Ascent Despite Barriers
While often assumed that the path to economic and technological advancement is blocked, the reality is more nuanced: the ladder was damaged, not destroyed. China has steadily progressed, moving from an agriculture-based economy to one centered on manufacturing, and gradually ascending from assembly-focused industries into more advanced sectors. This climb has elevated the country from poverty toward middle-income status, reflecting persistent, if uneven, growth and development.
Yet, the ascent has grown steeper as China approaches the upper echelons of global power. The final rungs—core technology, international standards, financial influence, and narrative authority—remain the most fiercely protected, reflecting the concentrated defenses of richer nations. The challenge, therefore, is not an absence of opportunity, but the heightened difficulty of securing the very positions that determine global leadership. The distinction is critical: progress is still possible, but it requires navigating a ladder that, while damaged, still exists.
Rebuilding the Ladder: China’s Breakthrough in EUV Lithography
On December 18, 2025, Reuters reported that a Shenzhen-based Chinese team had successfully completed a working prototype of an extreme ultraviolet (EUV) lithography machine, the cornerstone technology for advanced semiconductor fabrication. Currently, EUV systems are tightly controlled and only supplied by ASML to U.S. allies such as Taiwan, South Korea, and Japan. China’s achievement, even at the prototype stage, represents a profound shift in the technological and strategic landscape.
From a Ha-Joon Chang perspective, this breakthrough is a textbook case of “rebuilding the ladder.” EUV lithography had been deliberately restricted by incumbent powers to maintain dominance over the semiconductor value chain. By denying China access, the West effectively “kicked away the ladder,” preventing latecomers from advancing. China’s effort to create its own EUV machine is not a violation of rules—it is a deliberate reconstruction of the technological pathway that had been blocked. Historically, similar patterns have been observed: the United States breaking British machine-tool monopolies, Japan replicating U.S. semiconductor processes, and South Korea building memory fabs despite being told it was too complex.
The significance of a Chinese EUV prototype goes beyond mere symbolism. EUV lithography enables sub-7nm logic nodes, high transistor density, and power-efficient AI accelerators—technologies crucial for advanced CPUs and GPUs. Even if China’s prototype is less reliable, slower, or behind ASML’s current machines, it allows domestic engineers to develop process know-how, improve materials, and iterate toward production readiness. Crossing the “it works at all” threshold is the hardest step, and it signals that monopoly control is no longer absolute.
Strategically, this breakthrough undermines the West’s containment architecture. For decades, ASML’s EUV machines were the ultimate choke point: without access, China’s chip industry was effectively capped at mature nodes. With a domestic EUV capability, the monopoly becomes a duopoly over time, export controls lose their full impact, and sanctions shift from permanent denial to temporary disruption. China’s long-term investment—state coordination, massive funding, tolerance for failure, and multi-decade horizons—mirrors the approach that allowed previous semiconductor leaders to catch up despite initial exclusion.
The broader implications for the global semiconductor ecosystem are profound. Domestic EUV production could gradually enable advanced logic chips optimized for China’s AI and computing needs, reduce dependence on foreign suppliers, and weaken the escalation power of Western sanctions. Moreover, the emergence of a parallel EUV ecosystem accelerates global fragmentation, producing diverging standards and processes. In effect, the attempt to maintain technological dominance inadvertently catalyzed the creation of an alternative system.
This development challenges the persistent narrative that China can manufacture but not innovate. EUV lithography demands mastery of plasma physics, ultra-precision optics, vacuum engineering, and atomic-scale control systems. A working prototype demonstrates that innovation can respond to exclusion: when the ladder is kicked away, China is building its own. In Chang’s terms, the irony is clear: attempts to freeze hierarchy only spurred maximum mobilization by a determined latecomer, illustrating a central paradox of late development.
Summary & Implications
Using Ha-Joon Chang’s framework, rich countries did not stop China by breaking globalization rules; rather, they wrote and enforced them in ways that allowed China to grow while limiting how quickly and how far it could converge—especially once it began to threaten existing industrial leaders. This is the 21st-century form of “kicking away the ladder”: not outright blocking development, but redefining which tools count as legitimate just as newcomers begin to succeed.
China’s effort to manufacture a state-of-the-art EUV machine exemplifies this dynamic, targeting the most fiercely defended technological chokepoint in the global economy. In Chang’s terms, this is not cheating but historical normality: incumbents restrict, latecomers substitute, rules change, and power gradually rebalances. If China succeeds—even partially—in EUV indigenization, it will mark the moment when “kicking away the ladder” ceased to constrain technological advancement in semiconductors.
References
- Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism. By Ha-Joon Chang, 2007
- Kicking Away the Ladder: An Unofficial History of Capitalism, Especially in Britain and the United States. By Ha-Joon Chang, 2002
- “Exclusive: How China built its ‘Manhattan Project’ to rival the West in AI chips”, Reuters. December 18, 2025. https://www.reuters.com/world/china/how-china-built-its-manhattan-project-rival-west-ai-chips-2025-12-17/