FC Cologne are pulling out of a deal to run a football academy in China, with a member of the club council saying they should not support “such a totalitarian and brutal dictatorship”.

The deal, which was going to be worth €1.8m (£1.5m) to the club, was originally put on hold in the summer and on Wednesday Cologne said they would not go ahead with it.

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The decision comes after Arsenal were criticised for their response to Mesut Özil’s Instagram post about China’s treatment of the Uighur population in its north-western region.

Cologne’s president, Werner Wolf, told the local paper Kölner Stadt-Anzeiger on Wednesday that they had decided not proceed with the project “in the current sporting situation”.

Stefan Müller-Römer, who was a member of the board until the summer and is back in his previous role on the club council, was more forthright, telling KSA: “I understand that Germany can’t completely get by without China and that there is an exchange between the two countries but we don’t need China in sport and I stand by that.

“In China human rights are being massively disregarded. A complete surveillance state is being built, one worse than even George Orwell could have imagined. I have followed developments in China for more than 20 years and I have been there several times. I know what I am talking about.”

The 51-year-old lawyer added: “That is why I am of the opinion that 1 FC Cologne should not be active there. Making money at any cost is not an option for me. Apart from the fact that it is questionable whether it is possible to make money there, there are more important things than money. And as a non-profit organisation, that is socially active, we cannot support such a brutal and totalitarian dictatorship.”

Arsenal, which has commercial interests, including a chain of restaurants, responded to Özil’s comments by releasing a statement on Weibo – a leading Chinese social media site – as well as on other platforms stressing they are apolitical and do not associate themselves with the player’s views.

Facebook Twitter Pinterest Mesut Özil’s comments on social media were met with anger among Arsenal fans in China. Photograph: Robin Jones/Getty Images

“Regarding the comments made by Mesut Özil on social media, Arsenal must make a clear statement,” it read. “The content published is Özil’s personal opinion. As a football club, Arsenal has always adhered to the principle of not involving itself in politics.”

Özil’s Instagram message read: “East Turkistan, the bleeding wound of the Ummah, resisting against the persecutors trying to separate them from their religion. They burn their Qurans. They shut down their mosques. They ban their schools. They kill their holy men. The men are forced into camps and their families are forced to live with Chinese men. The women are forced to marry Chinese men.

“But Muslims are silent. They won’t make a noise. They have abandoned them. Don’t they know that giving consent for persecution is persecution itself?”