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The flaws that China’s chief ideologue found in America

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In August 1988 an inquisitive young Chinese political scientist named Wang Huning came to America for a six-month visit. He admired the Gateway Arch in St Louis, Missouri, and analysed the town government of Belmont, Massachusetts, watched a football game at the Naval Academy in Annapolis, Maryland, and toured a detergent factory in Iowa City, Iowa. He was shocked by the many people begging in the streets and amazed by the softness of the waterbeds in the furniture stores. One question preoccupied him: how had such a young country raced so far ahead of his homeland, with its history of more than 2,000 years? He found a lot to respect in the dynamism of America, but he also identified contradictions that could tear it apart.

China-watchers debate the extent to which Mr Wang’s American sojourn influenced the course of China’s modernisation. What is known is that he left academia just a few years later, cutting off his torrent of published work, to help define the Communist Party’s message and maybe its policies for three successive presidents. Now Xi Jinping’s chief of ideology and propaganda, he is one of seven members of the Communist Party’s ruling body.

Americans should have learned from him, too. They still can. His book about his inquiry, “America against America”, is a time capsule from back before the cold war ended and the internet smashed a virtual world into the real one, back when a Chinese visitor might marvel that Americans could sharpen pencils with electric gizmos and order pizza over the phone. Mr Wang’s book reminds the American reader that in those days, too, Americans were anxious about big problems, from racism to homelessness.

America was an alien land to Mr Wang, and he saw important, enduring patterns in what the natives might overlook as the wallpaper of their lives. He spotted subtle controls everywhere. The police did not have to mandate identity cards because the government persuaded each citizen to volunteer to have one by calling it a driver’s licence and issuing it through a motor-vehicle agency. Big corporations such as Coca-Cola relieved the government of management over the lives of millions.

Because just about everything could be denominated in dollars, the voluntary pursuit of financial wherewithal, rather than any ideology or political system of coercion, was the ultimate source of stability. “People manage money, and at the same time they use money to manage people,” he wrote. Technological superiority had become the source of Americans’ sense of national superiority: “If you want to overwhelm the Americans, you must do one thing: surpass them in science and technology.”

Mr Wang was astonished by the public libraries. Ancient Chinese thought was unique, he argued, but failed to influence the world because of a lack of means to share it. By contrast American libraries gave everyone access to the knowledge of generations. “The purpose of building a reservoir is not to store water, but to irrigate,” he wrote. Knowledge was the source of social progress, but also social conflict. How to get the former without the latter?

Visiting Plymouth plantation and the Liberty Bell, Mr Wang admired how Americans put their thin history to work inculcating a shared political tradition. In light of recent events, his book’s most poignant passage describes the inauguration of President George H.W. Bush. Mr Wang was impressed by the pageantry, by the creation of a tradition strong enough to guarantee the transfer of authority. The important result, he wrote, “is not that the new president has power, but that the old president thus loses power”.

But Mr Wang did not think America’s unifying forces and traditions could withstand its centrifugal forces. He has been called the Chinese Tocqueville, but he disdained one of Tocqueville’s key conclusions. Mr Wang wrote that only someone such as Tocqueville, from an even more unequal society, could look at America and perceive a country achieving equality of conditions. Americans might claim to value both liberty and equality, but these values inevitably conflicted, and Americans prioritised freedom. They resented paying taxes that might yield greater equality, and the result was a destabilising divide between rich and poor.

Americans also claimed to treat the family as the basic unit of society, “but in spirit, the family is being hollowed out” because Americans actually emphasised the individual. Mr Wang was unsettled that parents put children younger than one to bed in separate rooms and encouraged their children to leave home starting at 18, to enter society “like entering a battlefield”. These children would have no time to take care of their parents as they aged, and yet because of the resistance to taxes the government would not be able to care for them, either, or for others left behind.

Who lost America?

Mr Wang was taken with Allan Bloom’s “The Closing of the American Mind”, published in 1987, which lamented a shift to cultural relativism in higher education. Mr Wang believed an abandonment of shared values was precipitating an American “spiritual crisis”. He thought the American system—“based on individualism, hedonism and democracy”—was losing out to the Japanese system “of collectivism, self-forgetfulness and authoritarianism”.

Mr Wang got that one wrong. And the Chinese model does not look so hot these days, either. But many Americans have come to share a version of his conclusion, that America’s contradictions are creating “an unstoppable undercurrent of crisis”. A record low of 28% say they are satisfied with “the way democracy is working in this country”, according to a recent Gallup poll. Sensible Americans still think that if only supporters of Donald Trump would wake up to the threat he represents to American institutions, they would reject him. The chilling reality is that that is what they like about him. Mr Wang may not have anticipated Mr Trump, but he did identify the corrosion of civic virtue that is letting the once and possibly future president tear so much to pieces.

Read more from Lexington, our columnist on American politics:
Donald Trump’s tremendous love (Feb 16th)
This is not a story about Taylor Swift and the Super Bowl (Feb 8th)
How to overcome the biggest obstacle to electric vehicles (Feb 1st)

Also: How the Lexington column got its name

Economics

The low-end consumer is about to feel the pinch as Trump restarts student loan collections

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Wall Street is warning that the U.S. Department of Education’s crack down on student loan repayments may take billions of dollars out of consumers’ pockets and hit low income Americans particularly hard.

The department has restarted collections on defaulted student loans under President Donald Trump this month. For first time in around five years, borrowers who haven’t kept up with their bills could see their wages taken or face other punishments.

Using a range of interest rates and lengths of repayment plans, JPMorgan estimated that disposable personal income could be collectively cut by between $3.1 billion and $8.5 billion every month due to collections, according to Murat Tasci, senior U.S. economist at the bank and a Cleveland Federal Reserve alum.

If that all surfaced in one quarter, collections on defaulted and seriously delinquent loans alone would slash between 0.7% and 1.8% from disposable personal income year-over-year, he said.

This policy change may strain consumers who are already stressed out by Trump’s tariff plan and high prices from years of runaway inflation. These factors can help explain why closely followed consumer sentiment data compiled by the University of Michigan has been hitting some of its lowest levels in its seven-decade history in the past two months.

“You have a number of these pressure points rising,” said Jeffrey Roach, chief economist at LPL Financial. “Perhaps in aggregate, it’s enough to quash some of these spending numbers.”

Bank of America said this push to collect could particularly weigh on groups that are on more precarious financial footing. “We believe resumption of student loan payments will have knock-on effects on broader consumer finances, most especially for the subprime consumer segment,” Bank of America analyst Mihir Bhatia wrote to clients.

Economic impact

Student loans account for just 9% of all outstanding consumer debt, according to Bank of America. But when excluding mortgages, that share shoots up to 30%.

Total outstanding student loan debt sat at $1.6 trillion at the end of March, an increase of half a trillion dollars in the last decade.

The New York Fed estimates that nearly one of every four borrowers required to make payments are currently behind. When the federal government began reporting loans as delinquent in the first quarter of this year, the share of debt holders in this boat jumped up to 8% from around 0.5% in the prior three-month period.

To be sure, delinquency is not the same thing as default. Delinquency refers to any loan with a past-due payment, while defaulting is more specific and tied to not making a delayed payment with a period of time set by the provider. The latter is considered more serious and carries consequences such as wage garnishment. If seriously delinquent borrowers also defaulted, JPMorgan projected that almost 25% of all student loans would be in the latter category.

JPMorgan’s Tasci pointed out that not all borrowers have wages or Social Security earnings to take, which can mitigate the firm’s total estimates. Some borrowers may resume payments with collections beginning, though Tasci noted that would likely also eat into discretionary spending.

Trump’s promise to reduce taxes on overtime and tips, if successful, could also help erase some effects of wage garnishment on poorer Americans.

Still, the expected hit to discretionary income is worrisome as Wall Street wonders if the economy can skirt a recession. Much hope has been placed on the ability of consumers to keep spending even if higher tariffs push product prices higher or if the labor market weakens.

LPL’s Roach sees this as less of an issue. He said the postpandemic economy has largely been propped up by high-income earners, who have done the bulk of the spending. This means the tide-change for student loan holders may not hurt the macroeconomic picture too much, he said.

“It’s hard to say if there’s a consensus view on this yet,” Roach said. “But I would say the student loan story is not as important as perhaps some of the other stories, just because those who hold student loans are not necessarily the drivers of the overall economy.”

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Economics

Consumer sentiment falls in May as Americans’ inflation expectations jump after tariffs

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A woman walks in an aisle of a Walmart supermarket in Houston, Texas, on May 15, 2025.

Ronaldo Schemidt | Afp | Getty Images

U.S. consumers are becoming increasingly worried that tariffs will lead to higher inflation, according to a University of Michigan survey released Friday.

The index of consumer sentiment dropped to 50.8, down from 52.2 in April, in the preliminary reading for May. That is the second-lowest reading on record, behind June 2022.

The outlook for price changes also moved in the wrong direction. Year-ahead inflation expectations rose to 7.3% from 6.5% last month, while long-term inflation expectations ticked up to 4.6% from 4.4%.

However, the majority of the survey was completed before the U.S. and China announced a 90-day pause on most tariffs between the two countries. The trade situation appears to be a key factor weighing on consumer sentiment.

“Tariffs were spontaneously mentioned by nearly three-quarters of consumers, up from almost 60% in April; uncertainty over trade policy continues to dominate consumers’ thinking about the economy,” Surveys of Consumers director Joanne Hsu said in the release.

Inflation expectations are closely watched by investors and policymakers. Federal Reserve Chair Jerome Powell has said the central bank wants to make sure long-term inflation expectations do not rise because of tariffs before resuming rate cuts.

A final consumer sentiment index for the month is slated to be released on May 30, and will likely be closely watched to see if the tariff pause led to an improvement in sentiment.

This is breaking news. Please refresh for updates.

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Economics

JPMorgan Chase CEO Jamie Dimon says recession is still on the table for U.S.

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Jamie Dimon, chief executive officer of JPMorgan Chase & Co., speaks during the 2025 National Retirement Summit in Washington, DC, US, on Wednesday, March 12, 2025.

Al Drago | Bloomberg | Getty Images

Wall Street titan Jamie Dimon said Thursday that a recession is still a serious possibility for the United States, even after the recent rollback of tariffs on China.

“If there’s a recession, I don’t know how big it will be or how long it will last. Hopefully we’ll avoid it, but I wouldn’t take it off the table at this point,” the JPMorgan Chase CEO said in an interview with Bloomberg Television.

Specifically, Dimon said he would defer to his bank’s economists, who put recession odds at close to a toss-up. Michael Feroli, the firm’s chief U.S. economist, said in a note to clients on Tuesday that the recession outlook is “still elevated, but now below 50%.”

Dimon’s comments come less than a week after the U.S. and China announced that they were sharply reducing tariffs on one another for 90 days. The U.S. has also implemented a 90-day pause for many tariffs on other nations.

Thursday’s comments mark a change for Dimon, who said last month before the China truce that a recession was likely.

He also said there is still “uncertainty” on the tariff front but the pauses are a positive for the economy and market.

“I think the right thing to do is to back off some of that stuff and engage in conversation,” Dimon said.

However, even with the tariff pauses, the import taxes on goods entering the United States are now sharply higher than they were last year and could cause economic damage, according to Dimon.

“Even at this level, you see people holding back on investment and thinking through what they want to do,” Dimon said.

— CNBC’s Michael Bloom contributed reporting.

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