I'm not sure how far this phenomenon goes back, but the idea behind the thinking is that helping might bring great trouble upon yourself - part superstition and part selfishness. I remember when was around 5 and I saw this other kid who was starving, I had pity on him and wanted to give him some food, but I remember my mother stopping me. There are also many 'pianzi' in China - they trick/lie to you in order to gain something, and people are very weary of this. This is why family/relationships are so much closer in China - people are only willing to help those they know.
I've heard that young people(particularly girls) in China are today more obsessed with money, so there very well may be truth to what you say about people being selfish.
>China is now more individualistic than America because people are forced to be.
I agree with this - competition is so high today compared to when my parents were growing up. The pressure back then was low as opportunities under the communist regime simply didn't exist - only those with great ambition would work hard. Most student/workers played around all day at that time.