LONDON (Reuters) – Britain and China will hold the next round of their Economic and Financial Dialogue (EFD) in mid-June in London, finance minister Philip Hammond said on Thursday, after months of reports that talks had been delayed by diplomatic tension.

The EFD has been used in the past to announce closer cooperation on trade and banking initiatives, and to sign commercial contracts.

However, relations between London and Beijing have been strained in recent years, most notably after a British warship sailed close to islands claimed by China last August.

The EFD talks were agreed during Hammond’s visit to Beijing to speak at a summit on China’s Belt and Road Initiative, championed by President Xi Jinping, which envisions rebuilding the old Silk Road to connect China to Asia and beyond with extensive infrastructure investment.

“By deepening our cooperation on financial services, trade, and investment with international partners, we can ensure Britain’s global future,” Hammond said in a statement.

In that light, Britain will view the agreement of potentially lucrative talks as a success and a step closer to rebuilding the close ties seen earlier in the decade when then-finance minister George Osborne successfully courted Chinese investment.

Hammond said the talks would continue the “golden era” of cooperation – a phrase used repeatedly since Xi’s state visit to London in 2015 which has become a byword for Britain’s pitch to tap the investment power of the Chinese state.

Earlier on Thursday, Chinese Vice Premier Hu Chunhua expressed regret to Hammond that the South China Sea issue had harmed ties, and that he hoped Britain could “respect China’s core interests and important concerns”.

Hammond said he shared Hu’s regret that there had been “some difficulties” in making progress before adding: “Of course, you understand that the UK takes no position in relation to the issues in the South China Sea.”

A Treasury official later said Hammond was talking about Britain not taking sides in relation to sovereignty disputes in the South China Sea and Britain’s commitment to upholding international arbitration rulings remained.

A Treasury statement said Hammond was due to tell the Belt and Road forum that Britain is a “natural partner for quality global infrastructure initiatives due to the world class talent and expertise the UK has to offer.”

The Chinese initiative has become mired in controversy, with some partner nations bemoaning the high cost of projects, though China has repeatedly said it is not seeking to trap anyone with debt.

Hammond will emphasis in his remarks that projects must meet international standards on governance, debt sustainability and environmental impact, the Treasury said.

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