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April 17, 2012 Will the Chinese Dream Replace the American Dream?

The American Dream has long been held up as the model for social mobility, allowing people from disparate backgrounds and varying levels of destitution to reinvent themselves. As first identified by a visiting Alexis de Tocqueville in his 1831 treatise, Democracy in America, the United States, unencumbered by class history or ethnic determinism, offered an unparalleled avenue for newcomers to advance in the world. In the years following de Tocqueville’s pithy analysis, tens of millions made the journey, as immortalized in Emma’s Lazarus’s 1883 sonnet, “The Great Colossus”:

“Give me your tired, your poor, Your huddled masses yearning to breathe free”

Many of these immigrants were able to establish highly-successful enterprises, rising from poverty to opulence in a single generation. Andrew Carnegie, born in a weaver’s cottage in rural Scotland, would become America’s greatest steel magnate and philanthropist. More recently, immigrants such as super-investor George Soros and Google co-founder Sergey Brin were able to achieve tremendous success. With a culture prizing risk-taking and unconventional ideas, the US has given rise to countless creative businesses, making many people wealthy in the process. Class background was no impediment to success; many of the nation’s more successful business people, including both Bill Gates and Warren Buffet, would hail from solidly middle-class backgrounds. Even for those not engaged in entrepreneurial risk-taking, the American Dream guaranteed at least a slice of the American pie: a house with a backyard for barbeques, two cars in the garage, and the periodic family vacation.

Despite the manifold success stories, the American Dream is starting to show some signs of fraying. An OECD study showed social mobility to be lower in the United States than in many European countries, even with the US’s historical absence of class or ethnic legacy. As Charles Murray presents in his controversial new book Coming Apart, America has become heavily divided between its upper and lower income brackets, with sharp divergences not just in income, but in health, lifestyle, religious observance, and divorce rates. In 1931, historian James Truslow Adams defined the American Dream by stating that,”life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.” Adams, however, does issue the caveat that, “it is not a dream of motor cars and high wages merely, but a dream of social order.” For many outside the rarified air of the top income brackets, this ideal has begun to slip out of reach

Furthermore, with comparably-slow growth rates and a financial sector still wounded by the crisis of 2008, opportunities for ambitious entrepreneurs are fewer and further between. Although the US has shown impressive signs of rebounding in recent months, crystallized by the Dow hitting a symbolic 13,000 this past week, it is still a mature economy with indebted consumers unable to max out their cards out any further. Housing starts and mortgage intermediation are still sclerotic. Thus, for those with a bit of cash, an appetite for risk, and the ability to dream big, the time has come to look elsewhere.

And where better to look than the Middle Kingdom. With a population of 1.3 billion, rising incomes and education levels, and a government enamored with investment, China offers a cornucopia of opportunities for the aspiring impresario. As the crowded expat pubs of Shanghai and Beijing can clearly attest, many have already taken the plunge, teaching English, studying Chinese language, or coming on assignment from their home countries. Although the percentage of foreigners actually starting their own businesses is relatively small, being in an environment of high growth rates, massive construction projects, and nouveau riche tycoons rolling around in black S-classes is enough to make any displaced foreigner feel like a development guru with his water-cooler buddies back home.

Amongst the many records on the horizon for China in the coming years will be surpassing Japan to become the world’s largest market for luxury goods, expected to happen by 2013. Shopping malls are being built with alacrity and BMW’s are quickly replacing bicycles along the nation’s broad avenues. All of these developments inevitably beg the question of where this wealth is actually coming from. Although research has confirmed that China’s GINI coefficient (wealth inequality) is rising, how does this portend for equal opportunity in getting ahead? Furthermore, with such impressive growth in virtually every sector imaginable, is it possible to rise to success from the lower rungs of society, achieving what is now being called the Chinese Dream?

How would we define the Chinese Dream? According to Helen H. Wang, author of The Chinese Dream, a simple definition is tough to come by. Although the country’s middle class is growing and estimated to reach 800 million within the next 15 years, Wang argues that being part of the global middle-class should not be conflated with the Chinese Dream, as the country’s values are imprecise. Shaun Rein, marketing consultant and author of the provocative new book, The End of Cheap China, finds the Chinese Dream inherently more aspirational than its American counterpart. Rein notes that brands marketed as being “middle class” have typically done poorly in China, as many Chinese see middle-classness as pedestrian. To them, middle class is but an ephemeral stop on their way to becoming wealthy.

Since the dawn of Reform and Opening in 1978, the Chinese Dream has come to incorporate foreigners. Mark Henry Rowswell, known affectionately to his legion Chinese fans as Da Shan大山, has been a staple of the Chinese media since his acclaimed appearance on CCTV’s 1988 New Year’s gala. Frenchman Julien Gaudefroy has also had phenomenal success in China, utilizing his perfect Mandarin to host an instructional language video, as well as land his own talk shows “Foreigner’s Viewpoint” and Foreigners Watching China.” A number of less talented foreigners have thrown their hats into the entertainment ring, with sundry results.

Others have brought their business acumen to the Middle Kingdom. Sabrine Sinkora, came to Shanghai from France in 2006, establishing a highly-successful children’s clothing company, Souris-Nous. Combining svelte French style with the bouyant prospects of the Chinese marketplace, Sinkora has been able to achieve in China what would not be possible at home. Christophe Danteisse, too, has synthesized the best of East and West and found his way in the Middle Kingdom. The French-born musician has been fascinated with the Middle Kingdom since he was a young boy and gained proficiency with the language from an early age. In deciding where to establish his performing career, it was a no-brainer for Danteisse. With a friendly business environment, a budding middle class with an affinity for French tunes, and his rare multilingual performing skills, China offered prospects other places couldn’t. For many foreigners like Danteisse, the Chinese Dream is quite real and, with hard work, perspicacity, and maybe a bit of trial and error, anything is possible.

However, in China, just as in the United States, perpetuating the dream of social and economic advancement looks problematic. Both countries have actually seen income inequality increase rather than decrease in recent years, impeding social mobility and leaving some behind. Furthermore, the social segregation between the haves and have-nots in each country has led to more deeped-seeded inequality. Well-off parents send their children to better schools, including supplemental instruction and tutoring in music and the arts. They are also increasingly living in different zip codes, shopping at different stores, and receiving their news from different sources. Institutional factors such as failing urban schools in the United States and the hukou system in China only exacerbate this inequality.

Furthermore, as Apple’s recent legal troubles and the Republican primary candidates’ immigration hysteria can both attest to, discrimination against outsiders is a major obstacle each of the countries will need to tackle. The failure of the United States to extend its program of H1B visas for highly-skilled immigrants will only curtail the type of innovation that has made Silicon Valley the envy of the world. China’s xenophobia is also highly problematic and often percolates to the micro-level. Judicial favoritism of local disputants over foreign enterprises, loose enforcement of contractual agreements, and rampant discrimination against laowai, or foreigners, are but of a few of the impediments to the Middle Kingdom becoming a land of opportunity. Just as the United States has grappled with on many occasions throughout its history (including today), China will need to make further strides in both internal and external inclusiveness if the China Dream is to thrive.

Provided American higher education continues to serve as a magnet for creative and hard-working people and the financial system returns to full health, the American Dream should continue to be alive and well. Through perseverance, first generation college graduates will continue to lead better lives than their forebears, passing their enlarged slice of the American pie onto their children and grandchildren. Through innovation, some like Mark Zuckerburg may even strike it rich. However, with an emerging middle-class, a vast rural population set to migrate by the hundreds of millions in the coming years, and an excitement for the future, China offers the grandest prize of them all for the emerging entrepreneur in the coming decades. Be it for a perceptive local or an foreigner arriving to strike out her lot in the world, the China Dream, for all its complexity, offers a new frontier unrivaled in its potential.