Sinotech: The U.S. and China Order Consulate Closures as Huawei Tensions Heat Up in Europe

U.S. and China Order Consulate Closures

The U.S. government on July 22 ordered China to close its consulate in Houston, accusing Chinese diplomats of engaging in espionage and the theft of American scientific research. Secretary of State Mike Pompeo said the consulate was “a hub of spying and intellectual property theft.” The Chinese Embassy in Washington called the decision to close the consulate “an outrageous and unjustified move which sabotages China-U.S. relations,” and said that China had followed rules laid out in the Vienna Convention on Diplomatic Relations on protocol for diplomats.

In retaliation, China ordered the United States to close its consulate in Chengdu. In a statement, China’s Foreign Ministry said that U.S. diplomats at the Chengdu consulate “engaged in activities outside of their capacity, interfered in China’s internal affairs, and endangered China’s security and interests.”

The specific events that led the Trump administration to close down the consulate in Houston remain unclear. Analysts noted that, in the international system, it is common practice for embassies and consulates to serve as hubs for espionage. And while the New York Times obtained a memo from American law enforcement that outlined a series of espionage campaigns emanating from the Houston consulate, experts pointed out that the Houston consulate’s operations likely pale in comparison to those China runs out of its San Francisco consulate.

Still, the U.S. decision to close the Houston consulate comes amid growing concern about Chinese intelligence and espionage operations targeting the United States. Just days before the closure of the consulate, the U.S. government released an indictment against two Chinese hackers accused of pilfering data on coronavirus treatments and stealing sensitive information from U.S. companies over the course of many years. On July 23, the U.S. charged four Chinese nationals with visa fraud, after the individuals allegedly failed to disclose their connections to China’s People’s Liberation Army (PLA).

The recent tit-for-tat marks the first time that the People’s Republic of China and the United States have shuttered each other’s consulates since formal relations were established more than 40 years ago. Following the announcement, Mike Pompeo delivered a speech in which he argued that U.S. efforts to engage with China had failed. He added that “If the free world doesn’t change… communist China will surely change us.” Taken together, the closure of the consulates and Pompeo’s fiery speech represent what many analysts view as a new low in rapidly deteriorating relations between the two powers.

Tensions Over Huawei Heat Up Between China and Europe

In Europe, opposition to Huawei has risen sharply over the past month, leading many analysts to believe the company risks being shut out of European 5G networks. On July 14, the U.K. banned Huawei components from its 5G infrastructure and ordered telecom providers to replace Huawei parts currently in use by 2028—reversing its decision in January to allow the company to play a limited role in the U.K.’s 5G rollout. Following the U.K.’s lead, France enacted a de facto phase-out of Huawei’s products (although it does not describe its policy as a ban). France granted licenses of up to eight years for Huawei components currently in its network but ordered those components removed after that point. The EU Commission on July 24 also released a report finding that Nokia and Ericsson—Huawei’s European competitors—could provide all the services needed for the European bloc to construct its own 5G network. While the report did not mention Huawei by name, it clearly referred to perceived security risks that Huawei poses.

These developments, and the U.K. policy change in particular, could influence the stance that other European governments take toward Huawei. European nations have closely studied the U.K.’s Huawei policies and many—including Belgium and the Netherlands—modeled their own restrictions on Huawei after Britain’s. The U.K.’s July decision has already bolstered opposition to Huawei in other countries. The German head of the EU Parliament’s China Commission, for instance, voiced support on July 14 for Germany to follow Britain’s lead. Germany, however, is not expected to make a decision about Huawei’s role in its 5G infrastructure until at least September.

China, for its part, has pledged retaliation against European countries that shun Huawei, increasing the likelihood that technology policy drives a wedge between Europe and China. On July 8, China’s state-run Global Times newspaper argued that the United States had spread malicious rumors about Huawei in Europe, and that the continent could not afford to cut ties with the company. After the U.K.’s ban, the Global Times called for retaliation. And on July 20, reports emerged that officials in China’s Ministry of Commerce were considering blocking European telecom companies Nokia and Ericsson if the EU banned Huawei. (A Chinese spokesperson denied these reports, citing Chinese bids that both European companies had won.)

Rising European opposition to Huawei marks a significant shift from the beginning of this year, when European nations appeared much more willing than the United States to work with the telecom company. In January, the European Union recommended limiting Huawei’s involvement in the continent’s 5G rollout, but not banning the company. The United Kingdom, that same month, made an initial decision to let Huawei supply it with a limited range of 5G products. However, doubts about Huawei took on greater force following concerns over China’s nontransparent handling of the coronavirus. The coronavirus crisis caused European leaders to rethink their relationship and underscored the potential security risks around 5G technology. The United Kingdom, additionally, likely reversed its policy partly due to new U.S. restrictions, issued in May, against transferring to Huawei goods produced with U.S.-made technology or equipment. U.K. authorities believed—as other countries now might—that complying with these regulations would be difficult if Huawei were to supply a new domestic 5G network

European countries’ moves away from Huawei have met with praise from the United States. Secretary of State Mike Pompeo lauded the U.K.’s decision last month while also urging other countries to “push back” against China. More broadly, Pompeo called for a “coalition” of nations to counter China both in the telecom space and other spheres. The United States has long urged European allies—at least since 2018—to be wary of dealing with Huawei. And it has recently stepped up these appeals. In mid-July, U.S. National Security Advisor Robert O’Brien met with French, Italian, U.K. and German officials to discuss Huawei’s security risks. Reportedly, U.K. politicians cited pressure from the United States as one cause for its ban in a private meeting with Huawei.

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