GP Insights # 388, 25 July 2020
In a Cold War-style diplomatic fight, the US ordered China to close its consulate in Houston, Texas this week accusing it of engaging "in massive illegal spying and influence operations".
In retaliation, Beijing ordered the closure of the US consulate in Chengdu in southwestern China.
What is the background?
First, the number of Chinese and American consulates in the two countries, respectively. There are five Chinese consulates in the US, besides the embassy in Washington DC, and an office at the UN in New York. It has still not been made clear as to why the consulate in Houston was singled out. Nonetheless, the Trump administration has threatened to close more Chinese consulates in the US.
The US currently has diplomatic missions in six cities on the Chinese mainland, including Chengdu, Guangzhou, Shanghai, Shenyang, Wuhan, and Beijing. The Chengdu consulate in the past has been under scrutiny; it was included on a top-secret map leaked by intelligence analyst Edward Snowden showing US surveillance worldwide.
Second, the tit for tat retaliations marks a new low in the ongoing tensions between the US and China. The US and China have engaged in a trade war for more than two years now. Even as the truce was declared in Jan 2020, with the signing of 'Phase 1' trade deal, most of the tariffs were not eased.
Subsequently, the US administration has been challenging Chinese assertions in the South China Sea. Besides, China has been accused by successive US governments of stealing American technology. The recent Chinese imposition of a controversial new security law on Hong Kong has met criticism from the Trump administration. The US government's views on issues of Taiwan, Tibet and Xinjiang have also ruffled feathers in Beijing.
Third, strong claims and accusations have been exchanged on both sides relating to the coronavirus pandemic: Trump and his officials have called it a Wuhan virus, China virus, and Kung flu, while Chinese foreign ministry endorsed a conspiracy theory linking the US army to Coronavirus. The US Justice Department this week accused China of attempting to steal information about American research on Covid-19 vaccine. The Chinese government has on its part accused the US of repeatedly setting "restrictions against Chinese diplomats, opening diplomatic bags from China without permission and seizing China's articles intended for official use".
What does it mean?
The closure of consulates by the US and China means an escalation in the bilateral tensions. Many view the US' dramatic move of shutting down a consulate and evicting diplomats as an unprecedented move that will serve as the most significant test to the bilateral ties since the establishment of diplomatic relations. This skews the few remaining dramatic channels between the two sides and might be difficult to reverse.
However, Chinese response, while retaliatory, is still measured till now. Closing Chengdu instead of a higher profile US mission indicates that Beijing was trying to avoid derailing ties completely. The response allows the US to assess whether further straining ties with China in an economic downturn is advisable. Notably, closure of consulates would affect diaspora as well as impact mutual economic and trade exchanges on both sides.