Impact of Closing China/US Consulates

Does it really matter that the Chinese Consulate in Houston and the US Consulate in Chengdu closed?

It looked like a scene from a spy thriller: Chinese diplomats frantically burning documents in the courtyard of the Houston Consulate hours before they were being evicted from the building.

Five days later, in Chengdu, the American flag outside the US Consulate was lowered and Chinese soldiers protected officials wearing hazmat suits as they entered the building.

The tit-for-tat closures of the consulates comes as tensions between the US and China reach new highs. While the closures may seem like a symbolic political game, they directly impact individuals, businesses, and intelligence operations for both countries.

Individuals & Business

Consulates around the world provide a number of services to citizens visiting or living in foreign countries. They process visas, renew and replace passports, help with legal assistance, visit those who are incarcerated, provide assistance with taxes, give absentee voting help, register births, assist with arrangements in the event of death, organize evacuations, and dealing with host country officials.

In Houston, the consulate provides services for the 215,300 Chinese Americans who live in Texas. It also services other southern states, including Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma and Texas. Anyone in need of consular services will now have to travel to Los Angeles, San Francisco, Chicago, New York, or Washington, DC. 

More US exports to China come from Texas than from any other state. In 2019, Texas exported $105 billion, and there are 208 Chinese companies with investments in Texas. Add in the other seven states the Houston consulate covers and the total exports for 2019 reach $60 billion.

The consulate provided visa and commercial services for Chinese companies in the region as well as for US companies exporting to China.

The US Department of State reports that the US Consulate in Chengdu, the westernmost US consulate in China, provided services to over 200 million people before it closed. It processed 150,000 visa applications annually, for Chinese citizens seeking to travel to the Und States. I also “hosted cultural and sporting events, including a forum to explore shared U.S.-Chinese history, and it brought over U.S. national soccer team members to teach soccer and support women’s empowerment.”

Sichuan Province, where Chengdu is located, is a hub for business activities in Central Asia. Intel, Motorola, SAP, Texas Instruments, Chevron, Dell and Amazon are among companies that operate in that area.

While travel is not currently an issue because of COVID, before they closed, the Chinese Consulate in Houston and the US Consulate in Chengdu were actively providing support and assistance to nationals who found themselves stuck in the area because of the pandemic. They were also helping businesses continue to operate and providing support for evacuating staff members.

Intelligence

When the US Administration ordered China to shut down its consulate in Houston, it alleged “massive illegal spying and influence operations.” This may sound like a shocking accusation, but the reality is that intelligence services from every country in the world use embassies and consulates as a base for intelligence collection and operations.

The consulate closures will not stop those intelligence activities, but does likely cause some heartburn for intelligence agencies in both China and the United States.

The US alleges that China lost a major spying hub. Targets in the area likely include the petroleum industry, the medical industry and high tech. Not only do the Chinese lose some access to Texas, they also lose the diplomatic cover for the entire southern US.

But don’t be fooled: China will not be blinded by the consular closure. In addition to tasking members of the intelligence service with collecting information, Beijing use students, business leaders, tourists, and a variety of other sources to target the US. China also has a vigorous cyber intelligence network which will remain in tact regardless of the closure of the consulate. China also employs other methods of collection beyond “humint,” or human intelligence, to meet its intelligence requirements.

The biggest loss for the Chinese with the Houston consulate closure is their ability to track overseas Chinese in the southern United States. Beijing is known for using diplomatic posts to keep an eye on citizens who come to the US to work or study. With the consulate closed, they will have to rely on their other intelligence resources to keep tabs on citizens currently in the United States.

On the US side, the closure of Chengdu will likely hinder information collection on Tibet and western China generally. US intelligence officers will face difficulties in meeting with assets, which could leave Washington ill-prepared to deal with any developments in western China, and further undermine American goals in the area.

So Does it Matter?

The simple answer is yes, the consulate closures matter. While neither Houston nor Chengdu are the primary diplomatic missions in either country, they do play a significant role in serving citizens in those areas, and provide a window to activities happening in the areas where they operate.

For now, the impact is somewhat dampened because of COVID restrictions, but over the long term, the closures may have significant impacts.

The closures may have even wider implications as the US and China maneuver to gain advantage in the diplomatic quarrel. For example, Beijing has been known to retaliate against companies operating in China when governments behave in ways they don’t appreciate. Watch for Beijing to restrict activities of US companies if tensions don’t cool soon.

From an intelligence perspective, the closures will hamper US activities inside China. The closures signal a new willingness by both sides to target diplomats in-country, and China is likely to allege spying by US representatives in-country in response to US allegations against Chinese diplomats. In the short term, the US will have difficulty watching activities in Tibet, where the US Department of State’s Human Rights Report warns Chinese repression of free speech, religion, movement, association and assembly are more severe than in other areas of the country, except Xinjiang, home of the Muslim Uighurs. Xinjiang is also in Western China, although it is serviced from the US Embassy in Beijing, and Chengdu’s closure may hamper efforts to monitor that area as well.

Moreover, the longer the fight between the US and China continues, the harder it will be to roll it back. Reopening an embassy or consulate is not automatic and will take time. And as the freeze deepens, both sides are likely to add more restrictions, making any thaw a long-term process.

By | 2020-08-03T08:31:15-04:00 August 3rd, 2020|Business, Espionage, Governments|0 Comments

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