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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. ■
Guests and attendeess mingle and walk through the atrium during the IMF/World Bank Group Spring Meetings at the IMF headquarters in Washington, DC, on April 24, 2025.
Jim Watson | Afp | Getty Images
After years dominated by the pandemic, supply chains, energy and inflation, there was a new topic topping the agenda at the World Bank and International Monetary Fund’s Spring Meetings this year: tariffs.
The IMF set the tone by kicking off the week with the release of its latest economic forecasts, which cut growth outlooks for the U.S., U.K. and many Asian countries. While economists, central bankers and politicians have been engaged in panels and behind-the-scenes talks, many are attempting to work out whether trade tensions between China and the U.S. are — or perhaps are not — cooling.
These were some of the main messages from ECB members this week.
Christine Lagarde, European Central Bank president
On inflation and monetary policy:
“We’re heading towards our [inflation] target in the course of 2025, so that disinflationary process is so much on track that we are nearing completion. But we have the shocks, you know, and the shocks will be a dampen on GDP. It’s a negative shock to demand.”
“The net impact on inflation will depend on what countermeasures are eventually taken by Europe. Then we have to take into account the [German] fiscal push by the defense investments, by the infrastructure fund.”
“We have seen successive movements, you know, announcement [of U.S. tariffs], and then a pause, and then some exemptions. So we have to be very attentive… Either we cut, either we pause, but we will be data dependent to the extreme.”
On market moves:
“When we had done our projections, we anticipated that… the dollar would appreciate, the euro would depreciate. It’s not what we saw. And there have been some counter-intuitive movements in various categories.”
“The German market has obviously been shocked in a positive way by the program soon to be put in place by the German government, with a commitment to defense, with a commitment to a big fund for infrastructure development.”
Klaas Knot, The Netherlands Bank president
On tariff uncertainty:
“If I look back over the last 14 years, in the initial days of the pandemic I think that was comparable uncertainty to what we have now.”
“In the short run, it’s crystal clear that the uncertainty that is created by the unpredictability of the tariff actions by the U.S. government works as a strong negative factor for growth. Basically, uncertainty is like a tax without revenue.”
On the inflation impact:
“In the short run, we will have lower growth. We will probably also have lower inflation. As we also see, the euro is appreciating as energy prices have also come down. So together with the sort of negative factor uncertainty in the short run, it’s crystal clear that it will accelerate the disinflation.”
“But in the medium term, the inflation outlook is not all that clear. I think there are still these negative factors. But in the medium term, you might get retaliation. You might get the disruption of global value chains, which might also be inflationary in other parts of the world than the U.S. only. And then, of course, we have the fiscal policy coming in in Europe. So this is actually a time in which you need projections.”
On a June rate cut and market pricing for two more ECB rate cuts in 2025:
“I’m fully open minded. I think it’s way too early to already take a position on June, whether it would be another cut. It will fully depend on these projections.”
“I would need to see a more structured analysis of the impact on the inflation profile ahead of us, and only then can I say whether the market is pricing fair or whether I don’t.”
Robert Holzmann, Austrian National Bank governor
On the need to wait for more data and news on tariffs:
“We have not seen this uncertainty now for years… unless the uncertainty subsides, by the right decisions, we will have to hold back a number of our decisions, and hence, we don’t know yet in what direction monetary policy should be best moved.”
“Before looking at data in detail, the question is, what kind of political decisions will be taken? Is it that we will have some tariff increases? Is it that we will have strong tariff increases? Is it that we will have retribution by high counter tariffs?”
On the ECB’s April rate cut:
“I think there’s a broad consensus [on rates]. But of course, at the margin, people differ.”
“My assessment is that at this time, it wasn’t clear yet to what extent [tariff] countermeasures were being taken. Because with countermeasures in Europe, prices may have increased. Without countermeasures, quite likely the price pressure is downward. And for the time being, we don’t know yet the direction.”
On the direction of interest rates:
“I think if the recent noises about an arrangement [on trade] were to be true, in this case, quite likely it is more towards the downside than the upside with regard to prices. But this can be changed with different decisions and the result of which, we may even imagine in [the] other direction. For the time being, no, it will be down.”
“There may be further cuts this year, but the number is still outstanding.”
Mārtiņš Kazāks, Bank of Latvia governor
On opportunity from tariffs:
“With all this uncertainty and vulnerability, this is also the time of opportunities for Europe.”
“It’s a time for Europe to grasp all the aspects of being an economic superpower and becoming a really fully-fledged political and geopolitical superpower, and this requires doing all the decisions that in the past, were not carried out fully.”
“This requires political will, political guts to make those decisions, and to strengthen the European economy and assert its place in a global world.”
On market reaction to tariffs:
“So far it seems to be relatively orderly … but if one looks at the spillovers to Europe, the financial markets are working more or less fine, we haven’t seen spreads exploding or anything like that.”
“But in terms, however, of the macro scenarios, this uncertainty is extremely elevated in the sense that, given the possible outcomes, the multiple scenarios and their probabilities are very similar with the baseline [tariff] scenario.”
US President Donald Trump speaks during a bilateral meeting with Prime Minister of Norway Jonas Gahr Store in the Oval Office of the White House in Washington, DC, on April 24, 2025.
Saul Loeb | Afp | Getty Images
President Donald Trump denied that an aggressive bond market sell-off influenced his decision earlier this month to hold off on aggressive “reciprocal” tariffs against U.S. trading partners.
“I wasn’t worried,” Trump said in a Time magazine interview during which he was asked about financial market tumult after his April 2 “liberation day” announcement.
In the decree, Trump slapped 10% across-the-board duties against all U.S. imports and released list of tariffs against dozens of other nations. The extra levies were based on trade deficits the U.S. had against the respective countries and raised fears about inflation, a potential recession and disruption of long-held trade agreements.
Markets recoiled following the release. Treasury yields initially headed lower but quickly snapped higher. The 10-year yield rose half a percentage point in just a few days, one of its quickest moves ever, as investors also ditched stocks and the U.S. dollar.
Ultimately, Trump issued a 90-day stay on the reciprocal tariffs to allow time for negotiation. But he said it wasn’t because of the market tumult.
“No, it wasn’t for that reason,” Trump told Time in the interview from Tuesday that was published Friday. “I’m doing that until we come up with the numbers that I want to come up with. I’ve met with a lot of countries. I’ve talked on the telephone. I don’t even want them to come in.”
Yields have since moved lower, with the 10-year most recently around 4.28%, about a quarter percentage point higher than its recent low. Trump had said when he made the decision to hold off that the bond market had gotten the “yips.”
“The bond market was getting the yips, but I wasn’t. Because I know what we have,” he said. “I know what we have, but I also know we won’t have it for long if we allowed four more years of the gross incompetence. This thing was just running — it was running as a free spirit. This was — this was the most incompetent president in history.”
Though negotiations over tariffs are ongoing, Trump added that he would consider it a “total victory” even if the U.S. has levies as high as 50% still in place a year from now.
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The Bank of England is focused on the potential impact of U.S. tariffs on U.K. economic growth if there is a slowdown in global trade, the central bank’s governor Andrew Bailey said Thursday.
“We’re certainly quite focused on the growth shock,” Bailey told CNBC’s Sara Eisen in an interview at the IMF-World Bank Spring Meetings.
Going into its May 8 monetary policy meeting, the central bank will consider “arguments on both sides” around the impact of tariffs on growth and domestic supply constraints on inflation, Bailey said.
“There is clearly a growth issue we start with, with weak growth … but a big question mark is how much of that is caused by the weak demand, how much of it is caused by a weak supply side,” he continued.
“Because the weak supply side, of course, unfortunately, has the sort of the upside effect on inflation. So we’ve got to balance those two. But I think the trade issue is now the new part of that story.”
Inflation could be pulled in either direction by wider forces, with a redirection of trade exports into other markets being disinflationary, but a retaliation on U.S. tariffs by the U.K. government — which he stressed did not appear likely — pushing up inflation.
Bailey added that he did not see the U.K. as being close to a recession at present, but that it was clear economic uncertainty was weighing on business and consumer confidence.
IMF downgrade
The IMF earlier this week downgraded its 2025 growth forecast for the U.K. to 1.1% from 1.6%, citing the impact of U.S. President Donald Trump’s trade tariffs, higher borrowing costs and increased energy prices.
However, economic forecasting remains mired in uncertainty as countries engage in negotiations with U.S. officials over Trump’s swingeing universal tariff policy, currently on pause. The U.S. has imposed 25% tariffs on steel, aluminum and autos and a 10% levy on other British exports.
U.K. policymakers have expressed hopes of reaching a trade deal with the White House, with U.S. Vice President J. D. Vance saying there is a “good chance” of an agreement.
Bailey told CNBC on Thursday that he would be “very encouraged if the U.K. does make a deal,” but that its economy was very open and services-oriented, so it would still be impacted by a wider slowdown in growth or trade.
He also noted that inflation would increase from the current 2.6% in the coming readings due to effects from markets such as energy prices and water bills, but that the bump up would be “nothing like what we saw a few years ago.”
The Bank of England held interest rates at 4.5% at its March meeting, before Trump shocked the world with the scale of his tariff announcement.
Markets now see the BOE slashing rates to 4% by its August meeting.