Source: Global Times    Published: 2020-07-24

Washington’s order forcing the Chinese Consulate General in Houston to close will likely hamper business ties worth billions of dollars between the eight US states that the consulate serves and China, a former Chinese diplomat in the US said.

In what Chinese officials call an “unprecedented” escalation of tensions, the US government has ordered the consulate closed, the Chinese Foreign Ministry confirmed on Wednesday. The consulate, which opened in 1979, serves eight southern US states – Texas, Oklahoma, Louisiana, Arkansas, Alabama, Georgia, Florida and Puerto Rico.

“Everything the [US President Donald Trump] administration does is to disrupt China-US trade and economic ties. So the closure of the Consulate General in Houston certainly will disrupt businesses,” He Weiwen, a former economic and commercial counselor at Chinese Consulates General in San Francisco and New York, told the Global Times on Wednesday.

He said that though business is done mostly by companies, part of the consulate general’s work is to promote trade and economic cooperation between China and the eight states, and the closure of the consulate will have some impact on businesses. “The direct impact remains to be seen,” he said.

The eight US states are involved in trade worth tens of billions of dollars with China, which is a top trading partner of several states. For example, Texas, where the consulate is located, was the biggest exporter to China of all 50 US states, according to the website of the Chinese Consulate General in Houston.

In 2019, Texas exported $11.05 billion worth of products to China, with fossil fuel topping the list. As of March, there were 208 Chinese companies with investments in Texas, including oil giants Sinopec and CNOOC, the consulate’s website said.

While some states have relatively smaller trade with China, business was starting to pick up. The Consulate General said on May 1 that more than 26 Chinese companies registered with the consulate regarding investment activities in Florida – most of them private companies. That state exported $1.36 billion worth of goods to China in 2019.

Energy products, which are among the top exporting goods from the states, is part of the China-US phase one trade agreement signed in January, under which China has committed to buy $50 billion worth of energy products from the US over the next two years.  

While the actual impact of the closure remains unclear, the US move has seriously damaged the business environment, He said.

“The US is randomly undermining diplomatic relations and we have lost the political foundation for economic and trade cooperation… a stable, good political environment with mutual respect is necessary for normal trade,” he said.

He Weiwen is a senior fellow at the Chongyang Institute for Financial Studies, Renmin University.