The US President’s decision to close the consulate was made without warning or explanation. Hours before Trump’s administration made the order public, employees at the consulate were seen starting fires in a courtyard of the building in Houston, Texas.
This prompted police officers and firefighters to rush to the scene.
But fire crews were prevented from accessing the area.
Chinese diplomats stationed in Texas have been told operations will cease on Friday.
Beijing said the action was illegal and pledged to retaliate.
The Houston consulate is one of five in the US, excluding the Chinese embassy in Washington DC.
Sources told NBC the consulate was known for being a centre for Chinese spying.
Multiple US officials also told NBC the Houston consulate has been used by the Chinese government to steal valuable medical research for a long time.
They said it was also involved in attempts to infiltrate the oil and natural gas industries.
They added how the consulate is well-fortified to prevent US surveillance.
It was also a high-tech communications hub to coordinate and execute various spying operations according to the US officials.
The State Department said China was conducting “massive illegal spying and influence operations”.
David R. Stilwell, who oversees policy for East Asia and the Pacific at the State Department, told The New York Times the Houston consulate had a history of engaging in “subversive behaviour”.
He said the Chinese consulate in Houston was the epicentre of research theft in the US.
He said the consul general, the top Chinese official there, and two other diplomats were recently caught using false identification to escort Chinese travellers at an American airport.
Mr Stilwell also said some of China’s attempted scientific thefts in the US had accelerated over the last six months.
He said this could be related to efforts in developing a vaccine for COVID-19.
Mike Pompeo, US Secretary of State, said on Wednesday the Trump administration was “setting out clear expectations as to how the Chinese Communist Party is going to behave”.
He said the US would “take actions” to protect its interests.