As we noted on Day #1, if we watch how Beijing scripts the messaging we should be able to identify if Chairman Xi Jinping is taking the dragon approach toward his captive Kim Jong Un, or if Xi would instead reshape the geopolitics by announcing his release of Kim as a hostage: The magnanimous panda approach. [Critical Background HERE and HERE]

It looks like we have an answer today as Chairman Xi writes a personal op-ed, published on the front page of North Korea’s state newspaper, where Xi is releasing Kim from proxy province captivity:

…”China supports North Korea’s “correct direction” in politically resolving issues on the Korean Peninsula.”…

Yes, though important details are yet to follow, it appears Beijing is acquiescing to the unrelenting pressure from hostage rescuer President Donald Trump and allowing the DPRK to exit the controlled captivity of China. Likely denuclearization will commence.

SEOUL (Reuters) – Chinese President Xi Jinping said in an op-ed in North Korean state newspaper Rodong Sinmun on Wednesday that China supports North Korea’s “correct direction” in politically resolving issues on the Korean Peninsula. The front-page op-ed is an honor rarely granted to foreign leaders and comes a day before Xi is set to visit Pyongyang on Thursday and Friday at the invitation of North Korean leader Kim Jong Un, making him the first Chinese leader to visit in 14 years.

[…] Xi’s visit kicks off a flurry of high-level diplomatic activity around the Korean Peninsula ahead of the G20 summit in Japan later this month. Xi said the two Asian countries will “strengthen our strategic communication and exchanges,” adding that China will firmly support Kim’s achievements in “socialist construction” aimed at economic development and improving people’s lives, according to the newspaper. Xi said North Korea and China would expand and develop relations in civilian sectors, including education, culture, sports, tourism, youth and rural areas. “We will actively contribute to peace, stability, development and prosperity in the region by strengthening communication and coordination with the Democratic People’s Republic of Korea,” Xi said. China will also engage with other stakeholders “by jointly expediting progress on dialogue and negotiations on the issues of the Korean peninsula,” he added. (read more)

We now enter a phase of great nuance and subtle signaling where we will need to carefully evaluate the scale of hostage release. Obviously western media -writ large- are oblivious to the multidimensional hostage dynamic; heck, most major western media don’t even acknowledge that China controls North Korea… So we have a front row seat to review the generally coded signals.

Two days ago (Monday) Beijing announced Chairman Xi and South Korean President Moon Jae-in were scheduled for a bilateral meeting at the G20 (Osaka, Japan – June 28th and 29th). Obviously Xi has a plan to position the best face for his magnanimous panda approach. We also know on the issue of DPRK hostage release, Chairman Xi will need to save face against President Trump very carefully (hence the phone call between Xi and Trump on Tuesday).

One way for Xi to avoid the appearance of acquiescence to Trump would be for Xi, with Beijing approval, to place the optic of victory at the feet of Moon Jae-in. As we noted from the outset the most likely scenario is China positioning themselves as magnanimous panda and South Korea as the beneficiary. Hence the pre-planned G20 meeting.

“Peace is the Prize” ~ Donald Trump

Ultimately, I don’t think President Trump really cares about who gets credit for the victory, hostage release of Chairman Kim, and denuclearization of North Korea. The world will know, though the media will not say, the victory is only because President Trump has outwitted Chairman Xi and his communist regime…. and Trump did that though strategic economic pressure.

For two-and-a-half years U.S. President Trump has been working on two connected objectives: (1) removing the threat posed by North Korea by severing the ability of Beijing to use the proxy province as a weapon (Kim is hostage to China); and (2) deconstructing the growing economic influence of China.

Both issues are directly connected to U.S. national security; and both issues are being approached by President Trump through the use of economic leverage to achieve national security results.

In the dynamic of the denuclearization of North Korea, the most likely scenario is Chairman Xi playing the role of magnanimous panda and *guiding* Chairman Kim Jong Un into the world of nations. Hence the op-ed outlined today.

South Korean President Moon Jae-in will be positioned as the hero so that Xi doesn’t look like he lost Kim to Trump. However, what we don’t know is how much autonomy Chairman Xi will allow Chairman Kim. It’s the “guiding” part we need to watch closely.

Beijing isn’t going to let Kim go fully antonymous and independent; not when they share a border; and certainly not after generations of strategic influence and control over the DPRK as a proxy province and hedge against the West. Unfortunately, South Korean President Moon Jae-in will be useless as a counter wedge against the cunning of Xi Jinping in this very important aspect.

Moon is essentially the Asian Obama; and has about as much strategic intelligence, foresight and usefulness, as a bag-of-rocks being used as a weather vane. Moon is good for the international optics of unification and dancing joyfully etc, but he’s oblivious to how Beijing may infiltrate and influence all things in/around Korea. Ideological naivete’ makes Moon the perfect person for Chairman Xi to work with.

So we need to keep eyes open for the amount of freedom Chairman Xi will give to Chairman Kim; however, simultaneously we can enjoy watching President Trump exploit the shifted dynamic by engaging with Kim as a freed hostage with full independence.

We can expect that President Trump will immediately start engaging with Chairman Kim Jong Un very openly, as if his captivity never existed. That will drive Beijing bananas, as they will not know of possible private influence by Trump. In turn, President Trump will know the engagement with Kim will drive Beijing bananas; and so Trump will take the U.S. engagement to even higher levels of independence just to watch the dragon flare his nostrils. But that’s still a long way from today….

Remember, two connected objectives: (1) removing the threat posed by North Korea by severing the ability of Beijing to use the proxy province as a weapon; and (2) deconstructing the growing economic influence of China.

With #1 achieved, President Trump will still intend to get #2. Heck, Trump has spent 30-years openly advocating for the principle of restoring American wealth. That means the economic pressure will continue until Beijing is defeated. If Chairman Xi expects POTUS Trump to retreat from the massive geopolitical leverage he has created, well, it’s doubtful that will happen.

President Trump has threatened more tariffs and more consequential action as it relates to non-tariff barriers, IP protection, forced technology transfers etc as a result of China reneging on their prior agreement. Additionally, President Trump has been openly, albeit with coded messages, telling the world North Korea was already no longer a threat.

The best offer -the most likely offer- from President Trump at the G20, is a return to the original 150-page agreement, constructed by USTR Lighthizer and Vice-Premier Liu He, that Beijing and Chairman Xi walked away from. However, even that offer by President Trump is tenuously optimistic at best, because Trump knows China is on its heels.

President Trump has simply outwitted and outmatched Chairman Xi in this economic confrontation. While Xi thought he was outmaneuvering his rival, it was President Trump who was the one wearing the Panda mask all along.

In hindsight every move since early 2017 including: (1) the warm welcome of Chairman Xi Jinping to Trump’s Mar-a-Lago estate; (2) the vociferous praise poured upon Xi; (3) the U.N. sanctions where China and Russia agreed; (4) the November 2017 “golden ticket’ tour of Asia; (5) the direct engagement with North Korean Chairman Kim Jong Un; (6) the strategic relationship with Japanese Prime Minister Shinzo Abe; and a host of smaller nuanced moves were all quietly building toward this conclusion.

For President Trump to have navigated Chairman Xi into such a position is the pinnacle of strategic success. The Chinese culture doesn’t even have a frame of reference for a position that includes ‘less losing’ as their better option.

Jun 19, 2019

Trade Tensions Kick Asian Business Confidence To 10 Year Low… the lowest since the June quarter of 2009.https://t.co/OrTUqfKxqB — BenTallmadge (@BenKTallmadge) June 19, 2019