China vows retaliation after US shuts down Houston consulate

Bloomberg

China vowed retaliation after the US forced the closure of its Houston consulate, prompting stocks to fall in one of the biggest blows to diplomatic ties between the two countries in decades.
The US 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 on Wednesday in Beijing. China planned to “react with firm countermeasures” if the Trump administration didn’t “revoke this erroneous decision,” Wang said.
The US State Department subsequently confirmed in a statement that it had ordered the consulate closed “to protect American intellectual property and Americans’ private information.” It said international agreements required diplomats to respect the laws and regulations of the host nation and not interfere in its internal affairs.
The first signs of trouble came when 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, fires could be seen
in multiple containers, with smoke rising into the sky.
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 and silver slipped from the session highs.
The US has clashed with China over everything from trade and 5G networks to territorial disputes and responsibility for the pandemic.
The Justice Department 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.
“This sort of incident has been very rare — it often happens when the relations between two countries are really, really negative,” Li Mingjiang, an associate professor with the Nanyang Technological University’s S Rajaratnam School of
International Studies. “If China wants really to hit back hard, it could target the US consulate in Hong Kong.”
While ties have suffered in recent years, the trend has been toward expanding ties since the two sides formally established relations more than four decades ago. The US and China have recently been bickering over Chinese demands to control the Covid-19 testing — possibly gaining access to DNA samples — of returning American diplomats who left the country in the early days of the coronavirus outbreak centered on Wuhan, several people familiar with the matter told Bloomberg News last month.
The dispute over testing and quarantining has been a contentious issue, according to a person familiar with the situation who asked not to be identified. China could respond to the American order by closing the US consulate in Wuhan, where the virus originated, or another city, the person said.
A State Department spokesperson, who declined
to be named, said China had
increased the scale of spying and influence operations over the past few years.