In a shock move, the US has given China 72 hours to close its consulate in Houston amid accusations of spying and ongoing theft of intellectual property through cyber espionage.
The decision marks a dramatic deterioration in relations between the world's two biggest economies.
The US State Department said on Wednesday (local time), the Chinese mission in Houston was being closed "to protect American intellectual property and Americans' private information".
Described by Chinese media as “a crazy move”, the US president has suggested there could be more to come. In response to a question at a news briefing, Donald Trump said it was "always possible" other Chinese missions could be closed too.
Hours after the US made the announcement, footage captured by a local Houston news outlet showed workers at the consulate starting fires in the courtyard.
"We thought there was a fire in one that we did close," Mr Trump said.
"I guess they were burning documents, or burning papers, and I wonder what that's all about."
Overnight in Houston, firefighters went to the consulate after smoke was seen. Two US government officials told Reuters they had information documents were being burned there. However the firefighters were refused entry to the building.
Chinese Foreign Ministry spokesman Wang Wenbin said the consulate was operating normally.
The ministry said Washington had abruptly issued the demand to close the consulate on Tuesday (local time) and called it an "unprecedented escalation”.
The Chinese Embassy in Washington had received "bomb and death threats" because of "smears & hatred" fanned by the US government, spokeswoman Hua Chunying claimed in a tweet.
"The US should revoke its erroneous decision," she said. "China will surely react with firm countermeasures."
A video captured by our crew outside the Consulate General of China in Houston shows people hosing down what appear to be flaming open containers in the courtyard of the property.
DETAILS: https://t.co/2cOeKoap96 pic.twitter.com/ToQitHjy2T
— KPRC2Tulsi (@KPRC2Tulsi) July 22, 2020
China reportedly mulling retaliation
Communist Party rulers in Beijing were considering shutting the US consulate in the central city of Wuhan in retaliation, a source with knowledge of the matter told Reuters.
US-based China experts said Beijing could also opt to target more important consulates in Hong Kong, Shanghai or Guangzhou – something that could hurt American businesses.
Richard Grenell, who served until recently as acting director of US national intelligence, suggested the US could close the Chinese consulate in tech-heavy San Francisco.
The Houston move comes in the run-up to the November US presidential election, in which Trump and his Democratic rival, Joe Biden, have both tried to look tough towards China.
US Secretary of State Mike Pompeo repeated accusations about Chinese theft of US intellectual property, which he said cost “hundreds of thousands of jobs”.
He referred to a US Justice Department indictment on Tuesday of two Chinese nationals over what it called a decade-long cyber espionage campaign that targeted defence contractors, COVID-19 researchers and hundreds of other victims worldwide.
"President Trump has said: 'Enough. We are not going to allow this to continue to happen'," Mr Pompeo told reporters.
Republican Senator Marco Rubio, acting chairman of the Senate Intelligence Committee, described the Houston consulate on Twitter as the "central node of the Communist Party's vast network of spies & influence operations in the United States".
The New York Times quoted the top US diplomat for East Asia, David Stilwell, as saying the Houston consulate had been at the "epicentre" of the Chinese army's efforts to advance its warfare advantages by sending students to US universities.
"We took a practical step to prevent them from doing that," Mr Stilwell told the Times.
A Chinese diplomat, speaking to Reuters on condition of anonymity, denied the spying allegations and said the Houston mission acted like other Chinese consulates in the US – issuing visas, and promoting visits and businesses.
Do you have a story tip? Email: email@example.com.