Against the intense leverage being applied by President Trump, last week Beijing doubled-down and threatened punishment against any company that would leave China and begin manufacturing elsewhere.
The totalitarian response was predictable and expected.  However, also predictable was the corporate response to the threats.
As we shared:  “China is counting on prior western investment being so significant that a corporation will be reluctant to withdraw. However, in this outlook Beijing seriously underestimates the free market because communist controlled China doesn’t understand the action of a inherently free market.
The first loss is the best loss. If walking away from an investment provides more financial security and stability than attempting to retain a grip on a tenuous position – corporations will walk away.” (more)
Now today – “Nintendo Moves Some Switch Production Out of China”:

TOKYO— Nintendo Co. is shifting some production of its Switch videogame console to Southeast Asia from China to limit the impact of possible U.S. tariffs on Chinese-made electronics, said people who work on Nintendo’s supply chain.
It is another example of manufacturers adapting to the tariff threat. Taiwan’s Foxconn Technology Group said Tuesday that it was ready to move assembly of Apple Inc.’s iPhones out of China if necessary, and Japan’s Sharp Corp. , which is controlled by Foxconn, said last week that it planned to move production of personal computers to Taiwan or Vietnam.

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On Tuesday afternoon President Trump was asked a question by media about Kim Jong Un.  President Trump responded to the question, and simultaneously delivered an openly coded message to Chinese Chairman Xi Jinping that few would understand:

[Transcript] Q (Inaudible) about your meeting with Kim Jong Un while you’re in South Korea? Are there discussions underway?
THE PRESIDENT: So, I see that. And I just received a beautiful letter from Kim Jong Un, and I think the relationship is very well. But I appreciated the letter. I saw the information about the CIA, with respect to his brother, or half-brother. And I would tell him that would not happen under my auspices, that’s for sure. I wouldn’t let that happen under my auspices.
But I just received a beautiful letter from Kim Jong Un. I can’t show you the letter, obviously, but it was a very personal, very warm, very nice letter. I appreciate it.

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There’s always a larger geopolitical dynamic when you assess the economic alliances that President Trump puts together…. Always and underlying plan…  Sometimes it just takes time to surface.
As we have noted, even going back to 2017, Japanese Prime Minister Shinzo Abe always appeared to be the fulcrum for President Trump’s Indo-Pacific strategy.  

Remember the trip to Japan as honored guests of Emperor Naruhito and Empress Masako at the Imperial Palace?  Remember last month’s (May 25th) unprecedented reception with the titans of Japanese business?  Remember the private reception set up by a very nervous U.S. Ambassador William F. Hagerty?  A reception with the most influential business CEO’s in Japan and Southeast Asia? 
Well…

TOKYO (Reuters) – Japan’s Tokyo Electron, the world’s No.3 supplier of semiconductor manufacturing equipment, will not supply to Chinese clients blacklisted by Washington, a senior company executive told Reuters.
The decision shows how Washington’s effort to bar sales of technology to Chinese firms, including Huawei Technologies, is ensnaring non-American firms that are not obliged to follow U.S. law.

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Former White House China trade negotiator Clete Willems makes a rare appearance to discuss President Trump’s ongoing trade position with China; and the lessons they are learning from Trump’s severity with Mexico.
Fox News talking-hair Leland Vitter, a prime example of the axiom: “a little knowledge is dangerous”, tries his best to promote the preferred Murdoch points; however, Vitter finds himself struggling against the weight of the examples highlighted by Mr. Willems. Quite funny actually:

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Worth noting: President Trump spoke with Mexican President Andres Manuel Lopez-Obrador (AMLO) yesterday (See Tweets Below).
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Interesting, albeit not surprising, report from the New York Times after they are debriefed by a group of U.S. tech industry executives about a compliance meeting in China.
The Beijing regime of Chairman Xi Jinping summoned leaders from the top of U.S. tech industry companies and informed them of consequences for complying with U.S. laws that relate to black-listed Chinese industry; ie. Hauwei.  It will be interesting to see how this dynamic plays out.
Beijing is counting on the far-left anti-American ideology within Silicon Valley to create a communist economic alliance on U.S. soil that will work against the interests of the American people.

SAN FRANCISCO — The Chinese government this past week summoned major tech companies including Microsoft and Dell from the United States and Samsung of South Korea, to warn that they could face dire consequences if they cooperate with the Trump administration’s ban on sales of key American technology to Chinese companies, according to people familiar with the meetings.

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When President Trump began confronting China on trade practices, there was always a likely totalitarian Chinese response. The inevitable response when confronting the duplicitous dragon is always an attack; it’s the only way Beijing knows how to respond.

Last week Beijing threatened to take action against any corporation who would be perceived as working against the interests of the state.  This week communist Beijing begins doing exactly that:

(SCMP) China’s antitrust regulator slapped a US$23.6 million fine on Ford Motor Company’s Chinese venture for restricting sales prices in its hometown, taking the second such action against US carmakers in three years as trade tensions deteriorated between the world’s two largest economies.

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All your interests are belong to us…. There was previous discussion of how Beijing would respond if/when their economic interests were challenged. In essence, the prediction was that China would drop the panda mask and revert back to their oppressive totalitarian tendencies.

It is an interesting dynamic because the more the communist state moves to punish and control western business interests, the less likely any western investment flows into China. It’s a simple question: Why would anyone want to engage a business relationship inside a totalitarian system that could move at any moment to control your business?

(South China Post) China will publish a list of “unreliable” foreign entities deemed to have damaged the interests of Chinese firms – a move set to ratchet up tensions in its escalating conflict with Washington, after the US government blacklisted Chinese telecoms giant Huawei.
The Ministry of Commerce said on Friday that it would blacklist foreign businesses or individuals that violated market rules and contractual obligations, or took “discriminatory measures” to hurt Chinese business rights and interests, as well as national security and interests.

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Vice-President Mike Pence traveled to Canada today as an emissary of the Trump administration to support Canadian passage of the USMCA trade agreement.
According to Reuters media reports the vice-president was focused on the importance of a strong North American economic alliance, and how a united tri-lateral agreement can form a geopolitical hedge against influence from communist China and socialist ideologies in Cuba and Venezuela. Justin from Canada expressed his perspectives over diminished women’s rights, U.S. abortion laws, the important contributions of a transgender workforce, climate change and the NBA championship playoffs…. Yes, really:

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Meanwhile in Mexico: “The Senate, controlled by Lopez Obrador’s National Regeneration Movement (MORENA) and its allies, should approve the United States-Mexico-Canada Agreement (USMCA) once it has passed through congressional committee, the president said.” (link)
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A fascinating press conference from the standpoint of President Trump and Prime Minister Shinzo Abe’s united position toward the dynamic of North Korea.
It is obvious that Trump and Abe have a strategy for the next step in engagement with Chairman Kim Jong-un.  Notice how PM Abe gives prepared remarks specifically about direct talks, face-to-face talks, with Chairman Kim, facilitated by President Trump opening the door:

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Obviously President Trump trusts Prime Minister Abe as a strategic ally; and a big component of this state visit is the two leaders coordinating regional security issues. China confronted/contained, and simultaneously both partners working on the hostage rescue of Chairman Kim is incredibly consequential.
The strategic value of this state visit is much more than surface appearances.
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As once noted by CIA Director Mike Pompeo, U.S. President Donald Trump often does geopolitical messaging through twitter that is missed by the U.S. media but hits the target as subtle as a brick through a window. President Trump’s latest tweet on North Korea is a prime example.
If you view this tweet with the perspective that Chairman Kim Jong-un is essentially a hostage of Beijing masters, controlling the upper tier of his military, things make a lot more sense:

…And given the nature of the public comments by President Trump and Prime Minister Abe (transcript pending) during the current state visit; it would appear that Trump has enlisted Abe in hostage rescue efforts.
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