China sent a clear message to the global economy with the shock resignation of Cathay Pacific’s CEO.

Yes, yes, Rupert Hogg stepped down August 16 to “take responsibility as a leader of the company in view of recent events.” But no one really buys that explanation, given Cathay’s public scrutiny amid Beijing’s turf war with Hong Kong protesters.

News that some Cathay staff supported the protesters put one of Hong Kong’s most celebrated names into China Inc.’s crosshairs. With blistering speed, the CEO and at least three pilots were gone, and the board bowed to a list of Beijing demands.

Hogg’s was—symbolically—a public execution, the kind gangsters worldwide have long used to remind cronies and competitors who’s boss and the rules of the game.

China is following the same playbook as it instructs Hong Kong CEOs to toe the party line. Call it the Tony Soprano playbook, one that is back in vogue in more corners of the globe than investors may care to admit.

Donald Trump calls himself The Art of the Deal president, but his governing style prioritizes extortion over diplomacy. His tariff-heavy effort to score a trade deal with China is more shakedown than negotiation. Targeting Huawei Technologies is Trump’s way of telling Xi Jinping: “Nice tech sector you got there. It’d be a shame if something happened to it.”

Trump’s trade negotiations with South Korea last year descended quickly into we’ll-break-your-legs territory. To force President Moon Jae-in to the table, Trump’s team threatened to relocate America’s military. In the end, Seoul agreed to bigger protection payoffs—an extra $900 million.

Shinzo Abe should expect similar strong arm tactics in the months ahead. As the U.S and Japan have a sit-down on bilateral trade, Trump will squeeze Tokyo to import more Ford and General Motors vehicles. Japan’s prime minister is also sure to face his own military payments shakedown.

I don’t claim to be the first to connect the dots here. It’s a common theme in Saturday Night Live skits. As Late Night host Stephen Colbert quipped in May 2017 about Trump’s dealing-making style: “It’s like a horse head in the bed. It’s like the Godfather. Only in this one, nobody respects the Don.”

In his 2018 book A Higher Loyalty, fired FBI director James Comey referred to Sammy Gravano, a key associate of late New York mob kingpin John Gotti, in describing Trump’s demand for personal fealty. The experience, he wrote, was akin to “Sammy the Bull’s Cosa Nostra induction ceremony.”

I mention Tony Soprano, in part, because of the cottage industry that sprouted from his management style. The lead character in HBO’s hit series The Sopranos inspired countless academic papers, magazine profiles and books, including Anthony Schneider’s Tony Soprano on Management in 2004. And, of course, because show creator David Chase just began filming a Sopranos-related film titled The Many Saints of Newark.

Mob rules sure do seem to be de rigueur in global economic circles. Look no further than Boris Johnson angling to make the European Union offers it can’t refuse amid Brexit talks. Or Abe squeezing South Korea’s tech industry by limiting the export of vital materials. Or Mahathir Mohamad reminding Singapore where its drinking water comes from to gain geopolitical advantage.

Philippine President Rodrigo Duterte deputized bands of enforcers to take out drug dealers and users. He routinely muscles out political opponents and media outlets critical of his exploits. Though North Korea has long been adept at weapons-related extortion, Kim Jong-un’s recent short-range missile tests suggest a new turf war is afoot.

But China’s recent maneuvers may take the cake. Cathay, remember, was a signal to the corporate establishment that the same thing could happen to them.

Granted, President Xi has put the screws to companies around Asia before. In 2018, Beijing demanded that airlines flying to Taiwan list the destination as “Taipei, China” or else. It went after companies from American Express to Citibank to Goldman Sachs, demanding they scrub any distinction between China and Taiwan from websites.

The Gap had to apologize over T-shirts that ran afoul of China’s sense of its sovereignty claims. Versace ran into similar problems with the pro-Beijing social media mobs earlier this month. So did Hollywood producers making a sequel to Top Gun. Turns out Maverick’s iconic leather jacket bore a patch displaying Taiwan’s flag, and that had to be scrubbed reportedly to secure financing from Chinese internet giant Tencent.

China is also quite ready to go to the economic mattresses with neighbors. Last year, it went into full vendetta mode over South Korea hosting U.S. missile-defense systems. China cancelled scores of mainland tour groups planning Korea vacations. It rejected visas for K-pop stars. Hyundai Motor car lots across China went silent, while Lotte Department Stores were shuttered. Trade slowed to a trickle.

Yet the shock of Hogg’s career assassination still reverberates through the neighborhood. Its chilling message is setting in as business confidence craters. Look no further than Jack Ma shelving Alibaba’s planned $15 billion share sale on the Hong Kong exchange.

Suddenly, for multinational firms the price of access to Asia’s biggest economy is a topic of frenetic debate. Hogg’s resignation signaled that Xi’s China expects nothing less than full compliance with the Communist Party’s authority. Luxury brands, automakers, hoteliers and banks must now be careful not to cross China’s red lines.

The Cathay mess shows what’s at stake as China dabbles in omertà-nomics. Could its turf battle with Hong Kong get worse for global markets? Fudgegettaboutit!

Source: Forbes