HONG KONG - A move by China to shut the United States’ consulate-general in Hong Kong as a way to hit back at the US for booting out the Chinese counterpart in Houston would be akin to a nuclear option, political watchers said.

Such an order would be devastating not just to Hong Kong, but also to the US and China, they noted.
Associate Professor Alfred Wu of the Lee Kuan Yew School of Public Policy (LKYSPP) believes Hong Kong is not a likely option for closure by China.

The national security law has already caused “so much trouble” for Beijing, with the Five Eyes members – US, Australia, the United Kingdom and Canada – responding in a strong and concerted way.

“I don’t think China will actually do this to Hong Kong, otherwise it looks like a game that’s out of control.

“If it acts on Hong Kong again and closes the US consulate in Hong Kong, it will be a kind of a bomb,” Prof Wu said.

Dr Willy Lam, long-time China observer and author of books on the Chinese Communist Party, said it would be “a very drastic measure” if China does so.

“It would exacerbate the Cold War between the two countries,” he said, adding it would be difficult for the US then to monitor the city’s degree of autonomy.

“The US would be denied the vantage point to check the degree of deterioration if this were to happen after the national security law, but this would be a drastic step,” he said.

Adding on to the complexities of the matter is the fact that the US recently removed Hong Kong’s special status, although it declined the more “nuclear” option of undermining Hong Kong’s US dollar peg, which could have been economically devastating for the city, said Mr Brock Silvers of Adamas Asset Management.

So a move to close the US consulate in Hong Kong would strengthen the idea that the city’s US dollar peg should be sacrificed, which would be an “economic earthquake” for the territory, he noted.

“A local business community that is already quite politically nervous would only become more so, and the pace of financial and human capital outflows would probably increase,” Mr Silvers added.

News that the US had suddenly ordered China to close its consulate in Houston by Friday (July 24) came on Wednesday, with the US State Department saying China was directing “massive illegal spying and influence operations throughout US”.

Hours after the US administration issued its order on Tuesday, consulate employees burned papers in open metal barrels in a courtyard of the Houston building, prompting police officers and firefighters to rush to the area.

China has called the action illegal and promised retaliation, with observers suggesting that it could order one of the US consulates to shut in a tit-for-tat move, as ties freeze between the two countries.

Mr Hu Xijin, editor-in-chief of the Global Times, said China would take counter-measures, but that closing the Wuhan consulate would not be strong enough, as the US had already evacuated staff during the Covid-19 pandemic.

He said the US had a large consulate in Hong Kong and it was “too obvious that the consulate is an intelligence centre”.

“Even if China doesn’t close it, it could instead cut its staff to one or two hundred. This will make Washington suffer much pain.”

Prof Wu believes that the US consulate in Chengdu is a prime target.

“Because Chengdu is still very important. It’s in charge of the western part of China. If you look at investment opportunities, the West now prefers coastal areas and western China, as these are more valuable for investment purposes,” he said.

In addition to Chengdu and the embassy in Beijing, the US has consulates in Guangzhou, Shanghai, Wuhan and Shenyang. It has a consulate general in Hong Kong.

The other significance of Chengdu is that it is the closest level to Beijing and Shanghai, Prof Wu said, adding that a move to close the consulate there would inevitably hurt China at a time when western China still needs investments to grow.

Similarly, Dr Lam said that closing the Shanghai consulate would be too disruptive a move for China, but not responding to the Houston closure would make Beijing appear weak and cowardly.

More importantly, he said, the US consulate in Chengdu would be the equivalent of the Chinese consulate in Houston.

Mr Drew Thompson, a LKYSPP visiting senior research fellow, believes Wuhan and Shenyang are more likely targets for China.

“For every consulate the US is permitting China to have, China has to grant reciprocal rights to one in China.

“So the linkages tend to be Chicago and Shenyang were reciprocal, and Wuhan and Houston were reciprocal.”

Asked about the impact on the US if its consulates in Chengdu or Wuhan were to be shut, Mr Thompson said the move would inconvenience people living in those districts as they would not be able to conduct business as easily with the US government, but the impact will be felt by a really small number of people.

On the Houston closure, Mr Zack Cooper of the American Enterprise Institute said: “Although the closure will make Chinese intelligence gathering more difficult, much of that work already goes on over information networks, so Beijing will be able to continue many of these activities without direct human contact. The same is true of the United States.”

He added that closure of the US consulate in Hong Kong would only further isolate the territory and drive more businesses to look for alternative locations, such as Singapore and Taipei.