Markets fall as China closes US consulate in response to Houston move

Markets fall as China closes US consulate in response to Houston move

  • Analysts warn of new cold war after Beijing tells Washington to shut its Chengdu mission

Beijing has ordered the closure of the US consulate in Chengdu in retaliation for Washington shutting its Houston mission, raising fears of a new cold war and buffeting global stock markets.

China’s benchmark CSI 300 index closed 4.4 per cent lower following the announcement and London’s FTSE 100 was trading down 1.2 per cent as tensions between the superpowers rose to their most dangerous level in decades.

Beijing said it notified the US embassy on Friday that it had revoked the Chengdu consulate’s licence to operate. It said the decision was “a legitimate and necessary response to the unreasonable actions of the United States”.

Analysts warned that tensions between the world’s most powerful countries had risen dramatically following clashes over the coronavirus pandemic, trade and a crackdown on Hong Kong’s autonomy.

China did not provide a timeline for the Chengdu closure, but Hu Xijin of the state-owned Global Times newspaper said the US was given 72 hours. Mr Hu on Wednesday said China had been given 72 hours to close its Houston consulate.