Growth Without Development? China and the Structural Limits of Neoliberal Globalization
China’s rise is often cited as proof that neoliberal globalization delivers development. In reality, it reveals the limits of a global order that generates growth while systematically constraining latecomer development strategies—a misreading with profound implications for how both China and the global economy confront the breakdown of the existing model.
For more than four decades, China’s extraordinary economic expansion has been widely cited as definitive proof that deep integration into the global economy delivers development. In both academic and policy debates, the claim that China is the “greatest beneficiary of globalization” has become a convenient shorthand—frequently invoked to legitimise the prevailing assumption that “globalization works.”
This conclusion, however, rests on a fragile analytical leap. China’s rise is treated not simply as an episode of rapid growth, but as confirmation of the institutional rules themselves. The distinction is crucial. Economic growth can occur under a wide variety of political and institutional arrangements; sustained development—understood as durable upgrading capacity, meaningful policy autonomy, and long-term convergence—cannot. Collapsing these two concepts obscures the highly specific conditions under which China’s experience was made possible.
A closer examination reveals that China’s trajectory exposes, rather than vindicates, the limits of neoliberal globalization. China’s success depended less on strict compliance with WTO disciplines than on their selective enforcement, combined with unusually strong domestic state capacity—precisely the kind of capacity that those rules were designed to constrain. These conditions were historically contingent, politically exceptional, and are increasingly absent today.
The Anti-Developmental Logic of Neoliberal Globalization
At the heart of neoliberal globalization lies the steady extension of trade disciplines into domains previously governed by national policy. Under the broad and elastic category of “trade-related” rules, policy domains once firmly within national jurisdiction—most notably investment regulation and intellectual property protection—have been folded into an increasingly binding international legal architecture. The cumulative effect has been a sustained contraction of policy space for late-developing economies.
This transformation became decisive with the transition from the GATT to the World Trade Organization. Negotiations over investment measures and intellectual property were not merely technical exercises; they were intensely political, and their outcomes overwhelmingly reflected the interests of advanced industrial economies. Although the new regime facilitated capital mobility and delivered short-term efficiency gains, it did so at the cost of sharply constraining the tools through which late developers had historically pursued industrial upgrading—industrial policy, financial regulation, and strategic control over technology.
Timing proved decisive. The establishment of the WTO coincided with the end of the Cold War, a moment when global capitalism achieved unprecedented institutional authority and the bargaining power of developing countries collapsed. For many latecomers, deep market liberalization no longer appeared as one development strategy among several, but as the only credible option. As a result, state capacity was progressively eroded, and the developmental-state model that had underpinned East Asia’s earlier successes became increasingly difficult to reproduce.
From a political economy perspective, neoliberal globalization therefore operates less as a neutral framework for shared prosperity than as an institutional order structured around the priorities of capital mobility. The marginalization of labour protections, combined with tight constraints on industrial policy and import substitution, has channelled developing economies toward export-led growth based on static comparative advantage. Yet without sustained state intervention, static advantages rarely evolve into dynamic ones. Under these conditions, growth need not lead to convergence. Instead, deep integration can entrench a pattern of growth without development.
China as a Contingent Exception
China is often cited as evidence that the developmental constraints imposed by neoliberal globalization are overstated. Despite accepting unusually stringent terms upon joining the World Trade Organization, it achieved sustained growth and significant industrial upgrading. Yet this outcome does not demonstrate the developmental neutrality of global rules. It instead reveals the extent to which their application has been contingent.
China’s deep integration into the global economy took place during a narrow and historically specific window marked by selective enforcement. The decade following its WTO accession coincided first with the United States’ strategic pivot toward the global war on terror after 2001, and later with its preoccupation with domestic and international financial instability following the 2007–09 crisis. In both cases, U.S. priorities depended in important ways on Chinese cooperation. As a result, enforcement of WTO disciplines related to intellectual property, technology transfer, and industrial policy was effectively deprioritised.
This permissive environment, combined with China’s proactive exploitation of legal ambiguities within the international economic regime, proved decisive. Before key rules were fully codified and hardened, China was able to build industrial scale, accumulate learning effects, and develop technological capabilities that would later prove difficult to unwind. Its ascent, therefore, was not the result of strict compliance with global rules, but of a temporary coexistence between deep global integration and residual policy autonomy.
Once this window closed, the underlying bias of the global-capitalist system became increasingly explicit. Since the mid-2010s, the United States has moved forcefully to prevent China from shaping the rules of the global economy. Through high-standard regional trade agreements and coordinated reform initiatives at the WTO with Europe and Japan—most notably the so-called “Trilateral Reform” agenda—constraints on industrial policy, state ownership, and technology transfer have been progressively tightened. The institutional conditions that once facilitated China’s rise are no longer available, either to China itself or to other late-developing economies.
Beyond the Myth of the “Greatest Beneficiary”
The instability of neoliberal globalization is now visible across both advanced and developing economies. Faced with domestic political backlash and intensifying geopolitical competition, advanced states have increasingly turned toward economic nationalism. At the same time, they have sought to reinforce international disciplines that further constrain policy autonomy elsewhere. In this environment, calls for deeper integration offer limited guidance—particularly for countries whose development challenges have become increasingly domestic rather than external.
What is required instead is not more globalization, but a different kind of globalization: a creative return to the postwar compromise—one that combined openness with economic sovereignty—updated for a far more integrated world. Dani Rodrik’s concept of “Capitalism 3.0” points in this direction: preserving international economic openness while restoring national policy space, social protection, and democratic choice. At the multilateral level, this would imply reorienting institutions such as the WTO away from enforcing ever tighter constraints on late-developing economies and toward explicitly pro-developmental objectives—closer to the “mild globalization” that characterized the early postwar settlement between trade openness and national economic management.
For China, abandoning the myth of being globalization’s greatest beneficiary is not an exercise in self-denial. It is a prerequisite for strategic recalibration. Persisting in this narrative risks misdiagnosing structural challenges—weak domestic demand, widening distributional imbalances, and constrained upgrading—as problems solvable through deeper external dependence. China’s central challenge today is no longer to defend the story of its past success, but to participate more actively in shaping the institutional priorities of a post-neoliberal global order—one in which development, rather than growth alone, once again becomes the organizing principle.
Jianyong Yue is a visiting fellow at the London School of Economics. He previously taught Chinese politics and development at King’s College London and the LSE. He is the author of China’s Rise in the Age of Globalization: Myth or Reality (Palgrave Macmillan, 2018) and Crony Comprador Capitalism: The Institutional Origins of China’s Rise and Decline (Palgrave Macmillan, 2024).
Photo by 银戈 马
