The European Commission rejected Chinese trade association statements that talks to resolve a dispute over allegations of dumping of solar panels had broken down, while Chinese comments highlighted risks the dispute could escalate.

EU regulators agreed to impose solar panel duties averaging 47 percent earlier this month following a investigation launched by a complaint from German manufacturer SolarWorld.

The dispute has the potential to impact 21 billion euros ($27.1 billion) worth of imported Chinese solar panels, cells and wafers from manufacturers such as Trina Solar, Yingli Green Energy and Suntech Power Holdings.

China's Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME), a government-backed Chinese industry association authorised to represent Chinese solar companies, told reporters in Beijing on Wednesday that it had made an offer during a visit to Brussels but was rebuffed by the European Commission.

"These claims are simply wrong and misleading for one simple reason - no formal negotiations are yet ongoing between the EU and China in the solar panel anti-dumping case," EU trade spokesman John Clancy said in a statement on Thursday.

EU currently accounts for about half of China's solar exports, which have already been hit hard by the euro zone debt crisis that had forced major European countries like Germany to slash subsidies for renewable power.

The United States last year slapped anti-dumping duties on solar cells imported from China. The European Commission said on May 8 it would take similar action. Both Washington and Brussels accuse the Chinese of selling panels below cost.

"If the EU does slap the duties, it will really mess up the Chinese solar industry. It will worsen the industry glut and many factories, especially small ones, will have to close down," Sun Haiyan, a top executive at Trina Solar, told Reuters.

CCCME said in a statement that "because the European side did not show sincerity to solve the problem through negotiations, this first round of negotiations ended in no result and broke down".

The EU's Clancy responded, "These technical preparatory talks have nothing to do with a proper negotiation." He said the Commission could not comment on the content of those discussions.

He added that according to EU law, formal negotiations could begin only after "preliminary findings" from the investigation are published in the EU's Official Journal.

CCCME made an offer for producers to voluntarily raise their prices to avoid duties during informal talks last week, a Chinese source familiar with the negotiations, said. "They have shown no flexibility, so it makes China very angry. It is quite rare for the export chamber to hold this type of press conference."

He said that EU regulators had insisted that they would accept only a price level consistent with the amount regulators say Chinese firms undercut European producers, which would amount to a markup of 47 percent.

"If they have carried out their tariff and they still insist on the high level of the price offer, then there is no need for us to negotiate, and China will have to respond in another way," the source said.

Chinese solar cells and modules would be completely priced out of the European market if the EU slaps the anti-dumping tariffs, Chinese industry executives say. Currently, Chinese solar panels are sold to EU countries at about 0.5 euro per watt, including freight costs, versus 0.60-0.65 euro per watt for local European products, according to a sales executive at another U.S.-listed Chinese solar panel maker.

Chinese solar panel companies have been seeking to diversify further into what they call "emerging solar markets" like Japan, South East Asia, the Middle East and Latin America in face of the EU anti-dumping threat.

Beijing says the EU duties would seriously harm trade ties and that it is expected to decide in June whether to levy its own duties on imported European solar-grade polysilicon, a raw material used in solar panel production.

The source said it was also possible that China could open an anti-dumping investigation into EU wine, but pressure on the Chinese government by the Chinese solar industry and domestic media could lead to a larger response.

"If the EU side really cares about the 47 percent tariff in June, then that kind of response is not enough," he said. "They will want to really hurt the EU."