China ordered the United States to close its consulate in the city of Chengdu on Friday, in a tit-for-tat response to being told to shut its consulate in Houston earlier this week, as relations between the two world powers deteriorated further.
China had warned it would retaliate after it was unexpectedly given 72 hours – until Friday – to vacate its Houston consulate, and had urged Washington to reconsider.
China said the move is a "legitimate and necessary response to the unreasonable measures by the United States", the foreign ministry said in a statement.
"The US move seriously breached international law, the basic norms of international relations, and the terms of the China-US Consular Convention. It gravely harmed China-US relations," the ministry said.
"The Ministry of Foreign Affairs of China informed the US Embassy in China of its decision to withdraw its consent for the establishment and operation of the US Consulate General in Chengdu," it said.
"The current situation in China-US relations is not what China desires to see, and the US is responsible for all this," the statement said.
The US Department of State and the US embassy in Beijing did not immediately respond to requests for comment.
Relations between Washington and Beijing have deteriorated sharply this year over a range of issues, from trade and technology to the coronavirus, China's territorial claims in the South China Sea and its clampdown on Hong Kong.
In a major speech on Thursday, US Secretary of State Mike Pompeo said Washington and its allies must use "more creative and assertive ways” to press the Chinese Communist Party to change its ways, calling it the "mission of our time."
Tensions have been escalating on multiple fronts between the world's two biggest economies, deteriorating further after Washington ordered the closure of the Houston consulate on Tuesday within 72 hours.
China had threatened to retaliate if the US did not withdraw its decision.
The Chengdu consulate was established in 1985, and has around 200 staff with approximately 150 locally hired Chinese staff, according to its website.
China shares slump
China shares slumped on Friday as investors fretted over the sharp escalation of tensions between Beijing and Washington.
The announcement came after China's stock market paused for its midday break, but mounting tensions had already pulled the benchmark Shanghai Composite index sharply lower in the morning session.
At the midday break, the Shanghai Composite index was down 2.25% at 3,250.37 points, and the blue-chip CSI300 index slumped 2.99%.
"Another escalation in tensions in the Sino-US relationship is extremely unfavourable to economic recovery under the impact of the pandemic," China Construction Bank analysts wrote in a note.
"We expect that before the dust settles on November's US presidential election, the US will repeatedly provoke contradictory disputes with China. We will closely monitor the implementation of the Phase 1 trade deal between the US and China," they said.
Chinese H-shares listed in Hong Kong fell 1.99% to 10,119.61, while the Hang Seng Index was down 1.83% at 24,801.69.
The smaller Shenzhen index was down 2.96% and the start-up board ChiNext Composite index was weaker by 4.31%.
The index tracking the 50 most representative stocks on Shanghai's STAR market fell 4.53%.
Around the region, MSCI's Asia ex-Japan stock index was weaker by 1.56% while Japan's Nikkei index was down 0.58%.
The yuan was quoted at 7.0189 per US dollar, 0.21% weaker than the previous close of 7.004.
With reporting by AFP