Chinese diplomats appeared to burn and destroy sensitive documents late Tuesday night at their Houston consulate following a U.S. State Department order that they immediately vacate the Houston diplomatic mission. State Department spokesperson Morgan Ortagus said the closure was done "in order to protect American intellectual property and Americans' private information." This marks a major escalation in what is turning into a cold war between the U.S. and China. Is this just political maneuvering ahead of the November presidential election or has the U.S. thrown down the gauntlet with China?

China was quick to respond to the U.S. move, saying the closure order was a "political provocation unilaterally launched by the U.S. side, which seriously violates international law, basic norms governing international relations and the bilateral consular agreement between China and the U.S." The Chinese were hinting at an equal response, adding, "China strongly condemns such an outrageous and unjustified move which will sabotage China-U.S. relations. We urge the U.S. to immediately withdraw its erroneous decision, otherwise, China will make legitimate and necessary reactions." This means a Chinese order for a closure of a U.S. diplomatic mission in China is all but certain to be announced this week.

These moves follow the Tuesday indictment by the U.S. Department of Justice of two Chinese "hackers" the government alleges were working with the Chinese government to steal trade secrets from U.S. biotech firms working on a COVID-19 vaccine. The indictment alludes to a Massachusetts company as well as many other firms working on everything from defense technologies to firms with private data on individuals. The hackers even threatened some of the firms with releasing their data unless a ransom was paid.

The consulate’s closure coming immediately after the indictment is a major escalation from the war of words we were accustomed to seeing during the Obama administration. The Trump administration has called out China’s island-building in the South China Sea as "illegal," has sanctioned Huawei and has encouraged its allies to do the same. China’s response may be measured, closing a smaller consulate somewhere in China, or it may be a further escalation, such as expelling the ambassador or closing multiple consulates. The problem for both countries is, however, that they are so inexorably linked in trade relations that it will be nearly impossible for either to abandon each other completely. So what is the end game here?

Donald Trump’s reelection is going to be an uphill battle with the economic downturn because of the coronavirus outbreak and his response to ongoing protests. He needs a unifying event to help him win reelection. A cold war with China, perhaps even a few small skirmishes, may help him ramp up rhetoric. As for the long-term post-election period, will Joe Biden or Trump continue to punish China and escalate tensions? I can’t see how they can without a replacement ready for both the production of goods and the world’s largest market for American goods. In this respect, we will look for this saber-rattling to peak in October and die down shortly after the election and a new detente to be reached shortly thereafter.