China has decided not to send its most senior finance officials to this week's meeting of the International Monetary Fund in Tokyo, as a territorial dispute continues to strain diplomatic relations between the two Asian powers.
The IMF said Wednesday that People's Bank of China Governor Zhou Xiaochuan is canceling his appearance due to what Beijing called a scheduling conflict. Zhou was to deliver a key lecture at the conference, but will now send his deputy instead.
China's state media say the Chinese delegation will be led by Yi Gang, vice governor of the People's Bank of China, and Zhu Guangyao, vice minister of finance. It also says four major Chinese banks have pulled out of the annual IMF-World Bank meetings.
Japan's Chief Cabinet Secretary, Osamu Fujimura, expressed disappointment with the pullouts.
"If the financial representatives were to decide not to attend the important meeting to be held in Tokyo, I find it regrettable," he said. "However, the bilateral economic relationship is valuable so it is Japan's intention to communicate effectively with China."
The cancellations come amid a worsening feud over an uninhabited archipelago in the East China Sea, which has already threatened important trade ties between Asia's two largest economies.
Japan's largest automakers, including Toyota, Honda, and Nissan, said Tuesday that sales of new cars in China plummeted in September after violent anti-Japan protests broke out across the country. The protests followed Japan's decision to purchase some of the disputed islands from their Japanese landowner.
IMF Chief Christine Lagarde last week urged both sides to quickly resolve the dispute, saying the struggling global economy needs both economic powers to be "fully engaged."
China, which has the world's second largest economy, has threatened to impose economic sanctions on Japan over the dispute. Tensions have also been high at sea, with China regularly sending patrol ships near the Japan-controlled islets.
The islands, known as Senkaku in Japan and Diaoyu in China, are surrounded by rich fishing grounds and potential energy deposits.
Japan says its decision to purchase some of the disputed islands was made in order to preserve stability, as Tokyo's nationalist governor had threatened to purchase the islands and build developments on them.
But the move enraged China, which says the islands are an essential part of Chinese territory that was "stolen" by Japan at the end of the 19th century following the China-Japan war.