The Chinese film “American Dreams in China,” released in 2013, was an instant box-office hit in China, capturing the country’s optimism about Western-style entrepreneurship. It tells the story of a young man who lands a seat at a prestigious university in Beijing and launches a wildly successful tutoring company called New Dream. The events are loosely based on the real-life journey of Michael Yu, the founder of China’s largest tutoring company, New Oriental. The character who resembles Yu studies Dale Carnegie mantras, tutors students over K.F.C., and woos a gorgeous classmate while preparing for an American-visa interview. By the story’s end, he’s swapped his schoolboy outfit for a business suit and transformed his tutoring service into a billion-dollar company. He ultimately doesn’t end up with the girl or the visa, but he acquires glory and capital—the American Dream, in other words, right at home in China.
The film is something of a love letter to capitalism. It opens with a dance remix of the socialist anthem “L’Internationale” and closes with an inspirational montage that features China’s real-life entrepreneurs, from Alibaba’s Jack Ma to the Laoganma chili-sauce mogul Tao Huabi to Yu himself. The movie suggests that any underdog with street savvy and hustle can rise to the top. By the time of the film’s release, Yu had become a household name, known as the “Godfather of Education.” New Oriental was a flourishing empire of learning centers, online courses, and bookstores, all built on the promise of leading students to “success.”
Last year, any remnants of China’s entrepreneurial optimism were abruptly shattered. On July 24th, the Chinese government introduced a policy known as “double reduction,” which took direct aim at the nation’s hypercompetitive education system. Schools were ordered to limit the amount of homework assigned to students, and tutoring companies that taught a K-12 core curriculum were restricted from prioritizing profit, going public, or raising foreign capital. Overnight, the tutoring industry faced an existential crisis. New Oriental let go of sixty thousand of its staff, the online English-tutoring platform VIPKid shut down some of its services, and TAL Education Group, renowned for its Math Olympiad-style courses, transitioned to a “quality education” program that teaches calligraphy instead of calculus. One of China’s largest education companies, Yuanfudao, started posting job listings for fashion designers, sparking rumors that it was pivoting its business to winter jackets. “The era of private tutoring has ended,” Yu wrote, in a sombre post to his WeChat account.
In reality, the promise of that era—that, with hustle, hard work, and help from New Oriental, anyone could climb the ladder of meritocratic success—had faded a long time ago. Instead, young Chinese have found themselves ensnared in a “crisis of involution,” endlessly competing for university spots, white-collar jobs, and apartments. It’s a race that seemingly begins in the womb. Overworked children are nicknamed jiwa, or “chicken babies,” which refers to a pseudoscientific health treatment from the nineteen-fifties in which patients were injected with fresh chicken blood to stimulate energy—except now the fresh blood is extra math class. “Come, and we’ll tutor your child,” read an advertisement that went viral on Chinese social media in 2020. “Don’t come, and we’ll tutor your child’s rival.”
The private-education industry, which China’s President, Xi Jinping, condemned in March of 2021 as a “stubborn malady,” was expecting some sort of reckoning. What caught everyone by surprise was the suddenness and severity of the government’s decree. In curtailing private tutoring, the government seemed to have multiple goals: rein in unchecked capital in the educational system, relieve pressure on overworked students and parents, address the sluggish birth rate (under a premise that less money spent on tutoring would mean a greater incentive to have babies), and impose greater ideological control on students in general. In August, foreign textbooks were banned in primary schools and middle schools, and the teaching of “Xi Jinping Thought” was made mandatory for all Chinese students from primary school through university. English-language learning, the traditional pipeline to Western universities, has also fallen out of favor; last year, a government adviser proposed removing English from the core subjects taught in schools and from university-entrance exams.
Skeptics have been watching to see how double reduction will work in practice. Yan Yifei, a social-policy researcher at the London School of Economics, believes that as long as China’s highly competitive college-entrance examination—the gaokao—still decides who gets into élite schools, students and parents will seek every advantage. Already the tutoring industry has continued underground, with rich families hiring expensive private tutors as “professional nannies.” Some schools in Beijing and Shanghai started pilot programs offering free after-school tutoring, creating a new problem: overworked teachers.
But private education wasn’t the only symptom of unfettered capitalism the Party wanted to address, and double reduction turned out to be among the first of several drastic government policies that have come to affect many sectors of Chinese society. The policies were so broad in scope that they were described as a “summer blizzard” and a “crackdown on everything”: not only on after-school tutoring but also Big Tech monopolies, cryptocurrencies, real-estate speculation, “excessively high-incomes,” rampant high-frequency stock trading, idol fandoms, and video games for minors on weekdays.
In August, Xi seemed to give the regulatory blizzard a name: common prosperity. For three decades, China has been living the first half of a famous saying by Deng Xiaoping: “Let some people get rich first.” Last summer marked a shift into the second half: “for the purpose of achieving common prosperity faster.” The old laissez-faire, neoliberal ethos of Deng’s era was out; Xi’s top-down, tightly controlled vision of equitable development was in. Some commentators called common prosperity the coming of a second Cultural Revolution, a kind of ideological cleansing of decadent Western values. The country is going through a “profound revolution,” the retired editor Li Guangman wrote, in an article that went viral. The “red” would return, he proposed, and the Chinese capital market would no longer be a “paradise for capitalists to get rich overnight.” Others have offered more sober analyses, seeing common prosperity not as the end of China’s market economy but a technocratic scaling back of its excesses—not a reversal to a Maoist utopia but a pivot to a state-led capitalism with non-American characteristics.
Dan Wang, a technology analyst, explained that Beijing has become disillusioned with the U.S. economic model, which it views as being driven by Wall Street on one coast and Silicon Valley on the other. He sees the Chinese leadership as “trying to discard capitalism with American characteristics . . . in favor of capitalism with German characteristics, which features a vibrant ecosystem of industrial firms and a more equal society.” Seen in this light, perhaps the Chinese government is building an education system and development model that aspire to steer talent away from what it calls “inflated growth,” such as cryptocurrencies and for-profit tutoring, to what it calls “high-quality growth” such as infrastructure construction and agriculture. Last October, the central government released a guidance pushing for the “high-quality development” of vocational education, which prioritizes training in areas such as advanced manufacturing and alternative sources of energy. In this new era, the government’s ideal young graduates aren’t joining hedge funds, flipping properties, or listing metaverse-related startups; they work in what Wang calls “the physical world” and proceed to “make babies, make steel, and make semiconductors.”
In response, the tech giants, from Tencent to Alibaba, have done things like set up common-prosperity funds: multi-billion-dollar pledges toward “high-quality growth” initiatives, such as revitalizing rural villages and improving gig-worker welfare. In 2020, Jack Ma fell from the Party’s good graces, and found his influence curtailed and the I.P.O. of an Alibaba affiliate company suspended. Afterward, he embarked on an overseas trip, to Spain—to study farming technology. Michael Yu jumped on the quality-growth bandwagon too, announcing on a December live stream that New Oriental was pivoting to a new venture: an online farmers’ market. Instead of tutoring English, Yu’s employees had been reassigned to new jobs assisting him in peddling rice, apples, and beef.
