The City of Edinburgh Council has shelved plans for a new “friendship arrangement” with a Taiwanese city following fears it could harm relations with China.

The local authority was due to consider a five-year partnership to strengthen cultural and commercial links between the Scottish capital and Kaohsiung, but plans have been dropped from this week’s council agenda.

Organisations including the University of Edinburgh, Edinburgh Airport and Edinburgh Chamber of Commerce warned the move could result in sanctions on the city and reduced trade, tourism and student numbers.

A report also raised concerns that it could lead to an increased risk of cyber attack.

Taiwan considers itself an independent nation, and largely functions as one currently.

However this view is not shared by China and in most other countries, including the US and UK, the island’s political status is contentious.

A report admitted the arrangement “does pose potential risks for the city’s relationship with China, but that these risks are difficult to quantify with confidence”.

It added the current threat level to the council of a cyber-attack remained “very high” and signing the arrangement “could increase these risks”.

Council leader Cammy Day, who has spearheaded efforts to strengthen relations between Edinburgh and Taiwan, visited Kaohsiung and Taipei on a Taiwanese government-funded trip last year.

In August he secured agreement from councillors to “work towards a memorandum of understanding between Taiwan and the appropriate city partners”.

This has since changed to a “friendship arrangement” built on a “principle of mutual benefit”.

This would seek to “strengthen commercial and innovation cooperation, enrich the cultural and artistic life of both cities”.

Mr Day said having taken on board the views of the business community and other partners they had decided “more discussion is required before taking this agreement forward”.

He said: “We’ll continue this dialogue and report back to a future council meeting.

“In the meantime, I remain in no doubt that developing these types of relationships with progressive and open-minded cities like ours is absolutely the right thing to do for the people of Edinburgh.”

China’s representative in Edinburgh told councillors he had “grave concerns” about a “sister city agreement between Edinburgh and cities from Taiwan”.

In a letter sent earlier this month, consul general Zhang Biao wrote: “This is not a action simply to promote exchange and friendship, it is deeply related to the Taiwan question and will bring about serious consequences.

“The Chinese government firmly opposes counties that have diplomatic ties with China to conduct official exchanges with Taiwan in any form, including signing agreement with sovereign implications or of an official nature.”

Mr Biao said the council signing a friendship arrangement with Taiwan “will hurt the feeling of the Chinese people and bring about serious consequences to our bilateral relations, which we do not want to see”.

He added: “Surely Edinburgh would benefit little but lose a lot from such action.”

Letters of support were received from the Kaohsiung City Government, the Taipei Representative Office in the UK and the Scotland Taiwanese Association.

But several organisations urged the council not to sign the arrangement:

• Edinburgh Airport feared it could harm work to increase the number of direct flights to China;
• Essential Edinburgh said there could be sanctions on the city “with consequential impact on future student and visitor numbers from China”;
• Edinburgh Chamber of Commerce emphasised the “success of recent trade missions and the importance of maintaining strong relationships with both Taiwan and China”;
• Edinburgh Hotels Association highlighted the “importance of Chinese visitors and students to Edinburgh’s businesses and tourism economy”;
• And the University of Edinburgh raised “risks associated with the general denigration of relationships with partner bodies in China if the proposed formal arrangement proceeds”.

Conservative group leader Iain Whyte said the local authority should focus on “improving the vital local services it provides rather than dabbling ineffectually in international politics”.

He added: “It’s obvious that this needed far more thought before being brought forward as a formal proposal.

“The pause is helpful as it will allow the council to engage more widely should any proposal returns.

“It’s time to focus on Edinburgh people’s priorities.”

Story by Local Democracy reporter Donald Turvill