Many dependency theorists as well as economic historians have contended that nineteenth‐century imperial policies and economic globalization de‐industrialized the global ‘periphery’. European metropoles extracted raw materials and tropical commodities from their overseas territories, and in turn indigenous consumers bought their industrial products, textiles in particular. This article investigates three of the assumptions of Ricardian trade theory that are often behind the de‐industrialization narrative. In this article it is argued that, at least for colonial Java's textile industry, these assumptions should be reconsidered. Adverse trade policies imposed by the Dutch and a prolonged terms‐of‐trade boom in favour of primary commodities make colonial Java a unique case for exploring the merits of the de‐industrialization thesis. Here it is demonstrated that Javanese households resourcefully responded to changing market circumstances, in the first place by flexible allocation of female labour. Moreover, indigenous textile producers specialized in certain niches that catered for local demand. Because of these factors, local textile production in Java appears to have been much more resilient than most of the historical literature suggests. These findings not only shed new light on the social and economic history of colonial Indonesia, but also contribute to the recent literature on alternative, labour‐intensive paths of industrialization in the non‐western world.