The US has ordered China to shut its consulate in Houston on concerns over the protection of American intellectual property, ratcheting up tensions between the world’s two most powerful nations
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Beijing immediately condemned the move and warned it would retaliate unless the US rethought its decision.
“We have directed the closure of PRC Consulate General Houston in order to protect American intellectual property and Americans’ private information,” the US state department said.
The request to close the consulate was made after the US Department of Justice on Tuesday unsealed an indictment charging two Chinese hackers with targeting American companies conducting coronavirus research. A state department spokesman said that China has “engaged for years in massive illegal spying and influence operations throughout the United States against US government officials and American citizens.”
“These activities have increased markedly in scale and scope over the past few years,” said the person.
The person added that Trump administration officials had made public their concerns, in court actions and statements, that Chinese officials “have interfered in our domestic politics, stolen US intellectual property, coerced our business leaders, threatened families of Chinese Americans residing in China, and more”.
The sudden escalation in tensions knocked China’s currency. The renminbi fell 0.4 per cent in mainland China trade and by almost 0.6 per cent offshore where it is allowed to fluctuate more freely. Both the onshore and offshore rates climbed back above 7 per the US dollar, a key level closely watched by analysts.
Wang Wenbin, a spokesperson for China’s foreign ministry, said the decision to close the consulate “in a limited time is an unprecedented escalation”.
“It seriously violates international law and basic norms of international relations,” added Mr Wang, according to Chinese state media.
Earlier on Wednesday, videos and local media reports from Houston showed what appeared to be consulate staff burning documents.
“The US asked China to close Consulate General in Houston in 72 hours,” wrote Hu Xijin, editor-in-chief of state-owned tabloid Global Times on Twitter. “This is a crazy move.”
Hong Kong’s Hang Seng index fell 2 per cent immediately following the news. China’s CSI 300 of Shanghai- and Shenzhen-listed shares surrendered most of its gains after earlier rallying as much as 2.1 per cent.
Other global asset markets also came under modest selling pressure. Europe’s equities benchmark the Stoxx 600 index was down 1 per cent in morning dealings, with futures tracking Wall Street’s S&P 500 down 0.6 per cent.
Beijing warned it would make “a timely and necessary response” if the US did not reconsider.
Beijing also alleged that the US had in recent months repeatedly opened its diplomatic pouches, which are used to send items confidentially between overseas missions and home countries without customs inspections. It said the US had also seized China’s official work items.
“For a period of time, the US government has continuously shifted blame and responsibility, stigmatising China,” said Mr Wang.
Relations between Beijing and Washington have fallen to their lowest ebb in generations, with the two sides clashing over Hong Kong, the trade war and alleged human rights abuses in Xinjiang.
The US senator overseeing foreign policy also told the Financial Times that he was pushing to give Washington more tools to curb controversial Chinese trade practices, including sanctions for intellectual property violations.
Marco Rubio, acting chairman of the Senate select committee on intelligence, tweeted: “China’s Houston consulate is a massive spy centre, forcing it to close is long overdue.”
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