(Bloomberg) — China vowed retaliation after the U.S. forced the closure of its Houston consulate, in one of the biggest blows to diplomatic ties between the two countries in decades.
The U.S. government gave China three days to close its consulate in America’s fourth-most populous city in an “unprecedented escalation,” Chinese Foreign Ministry spokesman Wang Wenbin told a regular briefing Wednesday in Beijing. China planned to “react with firm countermeasures” if the Trump administration didn’t “revoke this erroneous decision,” Wang said.
The State Department subsequently confirmed in a statement that it had ordered the consulate closed “to protect American intellectual property and Americans’ private information.” The agency said international agreements required diplomats to respect the laws and regulations of the host nation and not interfere in its internal affairs.
Futures on the S&P 500 Index dropped with European stocks after China’s announcement, while Treasuries edged higher and the dollar erased a loss. The yuan weakened and Hong Kong shares deepened their decline. Gold held near $1,850 an ounce and silver retreated from its highest level in about seven years.
The U.S. has clashed with China over everything from trade and 5G networks to territorial disputes and responsibility for the pandemic. The Justice Department on Tuesday accused two Chinese hackers of working for Beijing to steal or try to steal terabytes of data, including coronavirus research, from Western companies in 11 nations.
U.S. Says China Hackers Stole Secrets, Sought Virus Data
Trey McArver, partner at consultancy Trivium China, said Beijing would struggle to calibrate its response without risking further escalation.
“We have seen a step change in U.S. government actions toward China over the past couple of weeks,” McArver said. “The closing of the consulate is already big news in China, so the government will need to respond.”
The statements came hours after Houston police and firefighters descended on the consulate following witness reports that papers were being burned outside in open containers, the Houston Chronicle and two local TV stations reported, citing local police. In videos posted online by local media outlets in Houston, fires could be seen in multiple containers, with smoke rising into the sky.
While the diplomatic staff of the U.S. and China have often found themselves at the center of disputes, the trend has been toward expanding ties since the two sides formally established relations more than four decades ago. Recently, the U.S. and China have been bickering over Chinese demands to control the health screening of returning American diplomats who left the country in the early days of the coronavirus outbreak in Wuhan.
Houston TV stations KPRC and KHOU said local firefighters weren’t allowed inside the complex to inspect the situation, while KHOU said the fires were later extinguished. The Houston Chronicle said no injuries were reported.
On Wednesday, China accused the U.S. of harassing diplomatic staff and intimidating Chinese students, confiscating personal electrical devices and detaining them without cause. Chinese diplomatic missions and personnel also recently received bomb and death threats, it added. In the statement, China said “infiltration and interference is never in the genes and tradition of China’s foreign policy,” without referring to anything specific.
“China strongly condemns such an outrageous and unjustified move which will sabotage China-U.S. relations,” the Foreign Ministry said. “We urge the U.S. to immediately withdraw its erroneous decision. Otherwise China will make legitimate and necessary reactions.”
(Updates with U.S. comment)
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