Merkel, Li call for end to EU-China solar trade row

German Chancellor Angela Merkel and Chinese Premier Li Keqiang on Sunday called for an end to a trade row between Europe and China over solar panels and wireless equipment, telling a joint news conference they were both for free trade.

The European Union accuses China of pricing its solar panels and mobile telecom devices too cheaply and "dumping" them in Europe to corner the market. It plans to impose duties on Chinese panel makers.

China denies the allegations.

Merkel said Germany would do everything it could to prevent the trade dispute from escalating to the point where the European Commission imposed import duties on Chinese panel makers.

"Germany will do what it can so that there are no permanent import duties and we'll try to clear things up as quickly as possible," Merkel told reporters after a meeting with Li in Berlin. "We don't believe that this will help us so we want to use the next six months intensively."

The European Union is considering whether to impose punitive import duties on solar panels from China after the United States levied its own duties last year - a move opposed by Beijing.

China has threatened to retaliate if the EU pushes ahead with the investigation.

Li, standing next to Merkel at the briefing that followed the signing of a range of business agreements, said a trade dispute between the EU and China would harm both sides and benefit neither.

He said China was interested in both a two-way dialogue and consultation on how to resolve the issue.

"We don't agree with this decision and emphatically reject it," Li said, adding the step was "especially dubious" because the global economic recovery was still in fragile shape.

"It not only endangers jobs in Germany. It will also endanger the development of the sector in Europe. That will harm the interests of the European consumers and Europe's industry."

European Trade Commissioner Karel De Gucht said earlier this month he and fellow commissioners agreed in principle to open an anti-dumping and anti-subsidy case against China, but would first seek to negotiate a solution with Chinese authorities.

Merkel told the news conference that it was a "somewhat complicated situation" because the Commission has the authority to launch a procedure on its own. She said she believed a trade dispute could still be prevented with dialogue.

"Germany will do all it can so that this won't lead to import tariffs," she said. "That's not something we believe in."

The EU is China's most important trading partner, while for the EU, China is second only to the United States. Chinese exports to the 27-member bloc totaled 290 billion euros ($375 billion) last year, with 144 billion euros going the other way.

Earlier on Sunday, China announced it would hold informal talks with the European Commission on Monday to try to defuse the row over solar panels and wireless equipment.

Trade disputes between China and Europe have multiplied as commercial ties have deepened. Eighteen of 31 trade investigations conducted by the European Union involves China.

(Reporting by Erik Kirschbaum; editing by Mike Collett-White)