China orders U.S. Chengdu consulate shut; protesters jeer Houston closure

BEIJING/HOUSTON (Reuters) – China on Friday ordered the United States to close its consulate in Chengdu in response to a U.S. order for China to shut its Houston consulate, where staff packed up belongings watched by jeering protesters amid a sharp deterioration in relations between the world’s two largest economies.

The order to close the consulate in Chengdu, a city in southwestern China’s Sichuan province, continued Beijing’s recent practice of like-for-like responses to Washington’s actions.

Beijing had threatened retaliation after the Trump administration this week gave it 72 hours – until 4 p.m. on Friday – to vacate its consulate in the Texas city, and had urged the United States to reconsider.

U.S. Secretary of State Mike Pompeo said on Thursday the consulate had been “a hub of spying and intellectual property theft.” Washington and its allies must use “more creative and assertive ways” to press the Chinese Communist Party to change its ways, he said.

Senior U.S. officials said on Friday espionage activity by China’s diplomatic missions was occurring all over the country, but its activity out of the Houston consulate went well over the line of what was acceptable.

A senior State Department official also linked espionage activity from that consulate to China’s pursuit of research into a vaccine for the new coronavirus.

About 100 Chinese activists gathered at the consulate on Friday, shouting slogans denouncing communism and heckling consulate staff.

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Some held American flags as they watched workers loading belongings from the five-story consulate into trucks.

The consulate, one side of which was adorned with large red Chinese lanterns, was closed. People seeking visa applications were turned away, a guard said.

Protesters cheered when a tractor trailer circled the building with giant signs that read: “Freedom from Communism, and God Bless America.”

Relations between Washington and Beijing have deteriorated sharply this year over issues ranging from trade and technology to the coronavirus pandemic, China’s territorial claims in the South China Sea and its clampdown on Hong Kong.

China’s foreign ministry announced Bejing’s decision on the U.S. consulate in Chengdu in a statement. Foreign ministry spokesman Wang Wenbin said some personnel there were “conducting activities not in line with their identities” and had interfered in China’s affairs and harmed China’s security interests, but he did not say how.

Senior Chinese diplomat Wang Yi, who is also foreign minister, blamed Washington for the deterioration in ties.

“The current difficult situation in Sino-U.S. relations is entirely caused by the United States, and its goal is trying to interrupt China’s development,” Wang said in a video conversation with his German counterpart.

CHINESE RESEARCHER IN U.S. CUSTODY

U.S. President Donald Trump’s administration said the closing of the Houston consulate was aimed at protecting American intellectual property and personal information.

“We urge the CCP (Chinese Communist Party) to cease these malign actions rather than engage in tit-for-tat retaliation,” John Ullyot, a spokesman for the White House National Security Council, said in a statement.

In a related case, a senior U.S. Justice Department official said a Chinese researcher who took refuge at China’s consulate in San Francisco was taken into American custody on Thursday.

He said the researcher, Juan Tang, was part of a network of associates who concealed their military affiliation when applying for visas.

The U.S. consulate in Chengdu was given 72 hours to close, or until 10 a.m. on Monday, the editor of the Global Times newspaper said on Twitter.

The consulate opened in 1985 and has almost 200 employees, including about 150 locally hired staff, according to its website. It was not immediately clear how many are there now after U.S. diplomats were evacuated from China because of the pandemic.

Global share markets fell after the announcement, led by a heavy drop in Chinese blue chips, which fell 4.4%, while the yuan hit a two-week low. [MKTS/GLOB]

Technology stocks dragged Wall Street’s main indexes lower on Friday on the back of Sino-U.S. tensions and fears over rising coronavirus infections in the United States, putting the S&P 500 on track to erase all of its gains for the week.

A source had told Reuters China was considering shutting the U.S. consulate in Wuhan, where Washington withdrew staff as the coronavirus outbreak raged.

“The Chengdu consulate is more important than the Wuhan consulate because that is where the U.S. gathers information about Tibet and China’s development of strategic weapons in neighboring regions,” said Wu Xinbo, a professor and American studies expert at Fudan University in Shanghai.

He said the Chengdu consulate was less important for economic activity than U.S. consulates in Shanghai, Guangzhou and Hong Kong.

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