Other answers have suggested that Chengdu is "diplomatically equivalent" to Houston, but I would suggest that it is significantly less so. The region around Houston hosts hugely important scientific and industrial bases, whereas Chengdu is not nearly as technologically significant as the coastal cities. China does consider it somewhat sensitive due to it's relative proximity to Tibet, Xinjiang, and nearby military facilities, but given the extreme restrictions on movement in such areas that already exist, it is unlikely to inconvenience the US in that regard. Also, Chengdu is in the geographically somewhat remote Sichuan province. In fact, there is an old saying in China: "It's easier to go to heaven, than to go to Sichuan". Still, given the other options, it is probably the most "diplomatically equal" choice.
Other factors have probably also been considered. Closing down an embassy in a major city would signal a serious deterioration in relations, and would impact domestic business confidence. Despite the growth of their domestic economy, China is still sensitive to a drop in exports, due to the multiplier effect that (high-tech) exports have on the economy, their ability to co-opt technology from Western firms who manufacture in China, and also because a strong current account surplus support's their ability to maintain capital controls. On balance, Chinese exports to the US are much more important to them than US exports to China are to the US.
Another consideration is the fine balance that the government has to walk between encouraging nationalistic sentiment on the one-hand, and keeping it under control. Although nationalism often supports C.C.P. narratives, an excess creates unrealistic expectations. We saw a similar thing play out during the Senkaku Islands Dispute, where anti-Japanese protests became a problem for the government and eventually had to be suppressed.
In summary, their choice suggests that, for now at least, they want to deescalate the situation. This accords with their view that Western politics has a relatively short-term memory when it comes to China relations; they may be satisfied if they can "bank" the change of status of Hong Kong, and return back to normal relations with the West as soon as possible, even if this takes a few years. This pattern of major advances, followed by a "normalization" period has happened many times before, for example following their construction on the Paracel Islands. Under the current administration, the periods between such advances appears to have been reducing as their self-confidence increases.
