The Finance Ministry canceled the final leg of a key economic summit with the Chinese government, dealing a blow to hopes of boosting trade between the two countries’ financial sectors.

Officials informed key city stakeholders on Monday that previous plans for the 11th UK-China Economic and Financial Dialogue (EFD) – the latest iteration of which took place in 2019 – have been scrapped, Sky News has learned.

Sources said the UK and Chinese governments had jointly agreed to delay the EFD, but said officials hoped a series of bilateral agreements would nevertheless be unveiled in the coming months.

The reasons for the delay were not immediately clear, with a date set for talks later this month, Sky News reported earlier on Monday.

However, the resignation of chancellor Rishi Sunak last week and his successor Nadhim Zahavi’s decision to enter the Conservative Party leadership race have fueled industry concerns that the EFD could face a delay until later this year.

City insiders said talks had already taken place in recent weeks on issues including sustainable and green finance, which were expected to feature prominently on the EFD agenda.

The COVID-19 pandemic and deteriorating political relations between the UK and China have combined to postpone any summit, which was due to become annual, from 2019.

Holding talks in the coming weeks would give Mr. Zahavi an opportunity to strengthen his leadership credentials on the international stage.

China is Britain’s third largest trading partner and under David Cameron, then prime minister, the British government sought to establish a “golden era” of trade with the world’s most populous country.

The government’s decision to exclude Huawei Technologies from Britain’s 5G network, last year’s tensions in the South China Sea and growing hostility to Chinese investment in the UK from Conservative MPs such as Tom Tugendhat, another leadership contender, have, however, caused a recent chill in relations between Westminster and Beijing.

A year ago, Chinese Premier Li Keqiang held talks with directors of FTSE-100 companies including Diageo, HSBC, Rio Tinto and Standard Chartered to discuss bilateral trade.

Mr Lee told British business leaders that China would continue to open up its markets to give them greater access to the country’s fast-growing middle class.

In his final speech as chancellor, Mr Sunak said improving trade ties with China was a priority, calling for a “mature and balanced relationship” between the countries.

Despite the political upheaval in Westminster, this year’s Mansion House dinner, which also traditionally features the Governor of the Bank of England and the Lord Mayor of the City of London, will go ahead as planned on July 19.

A Treasury spokesman declined to comment on the EFD delay.

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