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China Calls U.S. Actions ‘Unprecedented Escalation’

The Chinese Consulate in Houston, Texas is closing its doors after orders from the U.S. State Department.

In comments on Wednesday morning, State Department spokesperson Morgan Ortagus said the decision was made to protect “intellectual property” and the “private information” of Americans.

In response, China’s Foreign Ministry spokesperson, Wang Wenbin, called the move an “unprecedented escalation.” Wenbin stated that, “The unilateral closure of China’s consulate general in Houston within a short period of time is an unprecedented escalation of its recent actions against China.”

According to multiple media reports, the local fire department responded to calls of someone burning documents at the Chinese Consulate in Houston. The consulate, designated as Chinese territory, did not permit firefighters to enter the area.

For employees at an embassy or consulate to burn or otherwise destroy sensitive documents prior to having to vacate is general protocol. In September 2017, the Russian Consulate in San Francisco, California, burned documents, following an order from the U.S. State Department to leave the building. Further, before the Iranian Hostage Crisis in 1979, State Department employees at the U.S. Embassy in Tehran burned documents.

Documents burned may include diplomatic cables, classified intelligence reports, clandestine dossiers, and other items that could contain sensitive information.

The threat posed by China’s theft of U.S. intellectual property is so significant that half of the FBI’s counterintelligence investigations are related to China. “We’ve now reached the point where the FBI is opening a new China-related counterintelligence case about every 10 hours. Of the nearly 5,000 active FBI counterintelligence cases currently underway across the country, almost half are related to China,” said FBI Director Christopher Wray on July 7, 2020.

The Department of Defense has also been contributing to a whole-of-government approach to Chinese intellectual property theft through the Defense Department’s Protecting Critical Technology Task Force.

On July 21, 2020, the U.S. Department of Justice issued a press release, alleging that two hackers in China, affiliated with Guangdong State Security Department, spent ten years hacking into “computer systems of hundreds of victim companies, governments, non-governmental organizations, and individual dissidents, clergy, and democratic and human rights activists in the United States and abroad.”

The Takeaway:

The decision by the State Department will likely escalate tensions between Washington and Beijing. China could respond by closing one of the five U.S. consulates on the mainland, or order the U.S. consulate in Hong Kong to be shut down. China will also likely use its state-run media outlets like Global Times and China Daily to paint the U.S. as an unfriendly and hostile partner. The safety of U.S. diplomats in China and Hong Kong could also be compromised or threatened.

Ordering the closure of a diplomatic establishment is a significant act. Generally speaking, it occurs only after an egregious offense. In 2016, when the U.S. closed the Russian dachas in New York and Maryland, it was in retaliation for Russian interference in U.S. democratic processes.

Prior to the order to close the Houston consulate, there were five official Chinese diplomatic establishments: The PRC Embassy in Washington, D.C., and Consulates in New York, Los Angeles, San Francisco, and Houston. Of the five, Houston has the lowest profile, but the Chinese government will view the closure order as a direct offense to their nationalism. In order to save face, Xi Jinping will have to respond.

The question is what the retaliation will look like. Given prior reactions to U.S. government punitive actions, the likely retaliatory actions could include a significant uptick in cyber activities directed at U.S. government agencies, infrastructure and private enterprise. Thefts of intellectual property and sensitive technologies are also likely to increase. There will be an increase of harassment of U.S. government officials posted to China as well as the possibility of the arrest and incarceration of U.S. business persons in China. 

Consider what the Chinese did (arresting two Canadian citizens for espionage) in response to the arrest of Huawei executive Meng Wenzhou.  Since prior punitive actions by the U.S. Government did not include the closure of an establishment, policy makers must be prepared for the closure of U.S. diplomatic establishments in China, to include Hong Kong.

Regardless of U.S. intentions in the closure of the PRC Houston Consulate, there will be consequences.

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