China is blocking requests to rebuild the British embassy in Beijing while the fate of its controversial mega-embassy in east London is being decided, the Guardian can disclose. Angela Rayner, the deputy prime minister and housing secretary, faces a politically fraught decision over whether to approve plans for a new Chinese embassy at Royal Mint Court. The Chinese government has resisted UK requests to carry out a major reconstruction of the British embassy in Beijing for at least a year on the basis that its own proposals in east London had been blocked. Three UK sources with knowledge of the negotiations said the embassy had become a top issue for China in its relations with Britain. China wants to build a giant complex on 20,000 sq metres of land at Royal Mint Court, a historic site near the Tower of London that it bought six years ago. Tower Hamlets council refused planning permission for the embassy in 2022, citing security concerns and opposition from residents. By calling in the decision last month, Rayner took it out of the council’s hands, though she has ordered a local inquiry into the matter. “Until that one gets moving the British embassy in Beijing won’t move,” one source who was involved in the discussions under the Conservatives said. “The grounds for turning it down were pretty spurious … It came about more because they were so angry that [planning permission for the Chinese embassy in London] was just turned down without any support.” Another source said of the Chinese government’s thinking: “They see it as a reciprocal-type thing where both people want changes, but our system doesn’t really work quite as centrally as theirs does.” Half a dozen people who have visited or worked in the British embassy in Beijing in the past two years told the Guardian it was in a dire state and in need of major reconstruction. An official who visited the embassy for meetings in the past year said the issue would “come up at every single meeting”. In a sign that the UK government is hopeful of finding a resolution to the matter, the Foreign, Commonwealth and Development Office (FCDO) submitted a procurement notice in August setting out plans to demolish the embassy in Beijing and rebuild it. The work is estimated to cost about £100m and is subject to local planning permission. The Chinese government bought the Royal Mint Court site for £255m in 2018 as part of a plan to relocate its embassy from Portland Place near Regent’s Park, where it is housed in a townhouse that has become a target for Uyghur and Tibetan protesters. After Tower Hamlets declined planning permission and the London mayor, Sadiq Khan, chose not to intervene, China refused to appeal and made it clear to Conservative ministers it wanted them to step in and give assurances they would back a resubmitted application. Relations between the UK and China were worsening, amid security and hacking concerns, Beijing’s crackdown on civil liberties in Hong Kong and reports of human rights abuses in Xinjiang. China’s decision to resubmit its application with no significant changes after Labour won the election marks a shift in relations. Rayner called in the proposal days after David Lammy, the foreign secretary, returned from a trip to China. If approved, the new embassy would be China’s biggest in Europe and almost twice the size of its embassy in Washington. A Ministry of Housing, Communities and Local Government spokesperson said: “Applications for a new Chinese embassy in Tower Hamlets have been called in for ministers to decide. A final decision will be made in due course.” A statement on the Chinese’s embassy website in August said: “Six years ago, the Chinese government purchased the Royal Mint Court, London, for the use as the new Chinese embassy premises. The UK government had given its consent to this. Now we are in the process of applying for planning permission. “Host countries have the international obligation to support and facilitate the building of the premises of diplomatic missions. Both China and the UK have the need to build a new embassy in each other’s capital, and the two sides should provide facilitation to each other.”