Stocks Plummet as US and China Engage In Consulate Shutdown War

China ordered the shutdown of the US Consulate in Chengdu as tensions escalate between the country and the US. China’s Foreign Ministry spokesperson, Wang Wenbin, said the measures taken by China is a legitimate and necessary response to the unjustified act by the United States. Earlier this week, Washington forced the Chinese consulate in Houston to cease operations, sending relations between the world’s two biggest political and economic powers to a new low.

The global financial market reacted drastically to the tension. While the Shanghai composite pared some losses, it still ended the day with a 3.86 percent , while the Shenzhen composite tumbled 5 percent. Bloomberg reported the sentiment is quickly souring amid the big threat to Beijing’s diplomatic ties with Washington. Traders based beyond mainland China sold more than $2.3 billion worth of Chinese stocks Friday, one of the largest ever outflows via Hong Kong’s exchange links. Some of China’s controlling tech shareholders are getting out as well. 

Adding to the tension, Chinese-owned social media phenomenon TikTok is fighting back as the Trump administration threatens a ban. CNN reported on Tuesday that US federal employees would be barred from using Chinese-owned mobile video app TikTok on government-issued devices under a bill that passed a US Senate Committee on Wednesday, as lawmakers feared the security of users’ personal data.

On the same day, TikTok announced that it plans to create 10,000 jobs in the US over the next three years, a substantial increase from the roughly 1,400 employees it currently has in the country. Moreover, TikTok is launching a $200 million fund to encourage US-based “influencers” to create more content. Creators must be 18 or older, to qualify for the TikTok Creator Fund, which will accept applications starting August, and also meet a certain follower threshold as well as consistently post original content in line with the platform’s community guidelines.

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