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Tuesday, October 27th, 2020
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China Has a Houston Problem

BLOOMBERG, JULY 22, 2020

With the pandemic still raging and economies in deep trouble worldwide, the last thing anyone needs is a diplomatic freeze that sees communications dry up entirely.

By Rosalind Mathieson for Bloomberg – In the tit-for-tat between the U.S. and China over everything from trade and Hong Kong to technology, there have been plenty of symbolic moves, but also some significant ones.

Today’s news that the U.S. gave China three days to shutter its consulate in Houston feels like the latter.

It’s unclear what exactly sparked the dispute over the consulate, which covers a chunk of the U.S. south. The State Department said the closure was to “protect American intellectual property” and America’s “private information.” China’s Foreign Ministry called it an “unprecedented escalation,” accusing the U.S. of harassing diplomatic staff, confiscating personal electronic devices and detaining them without cause.

Local media reports showed fires at the building as consular officials apparently burned confidential documents.

In this video, Chinese officials can be seen burning documents inside their Consulate. When firefighters responded, they were told they were not allowed to enter the building.

China and the U.S. have penalized each other’s diplomats before, but expelling an entire office is another step completely. U.S. stock futures fell, as did soybean futures (China is a big buyer and the U.S. a big seller).

The question now is how Beijing responds. The nationalistic tabloid the Global Times is running a Twitter poll on which U.S. consulate should now be shut, including Hong Kong. Wuhan could also be on the chopping block.

Calibrating a reaction will be difficult. Because even as Beijing pushes back it will want to avoid triggering an even bigger escalation.

With the pandemic still raging and economies in deep trouble worldwide, the last thing anyone needs is a diplomatic freeze that sees communications dry up entirely.

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