Growing trade tensions between Asia’s economic powerhouse and the European Union loomed over the meeting between Chinese Premier Li Keqiang and German Chancellor Angela Merkel in Berlin on Sunday.

Ms. Merkel said she wanted EU and China to negotiate a solution to the trade dispute in order to avoid the 27-nation bloc imposing sanctions.

“Germany will do everything in its power to make real progress in these talks,” she said in a press conference with Mr. Li following a close-door meeting between the two.

China has become increasingly frustrated by EU allegations that it is flooding the solar panel market with cheap products in an attempt to drive competitors out of business. If the EU were to find China guilty of such dumping, it could consider sanctions.

Mr. Li warned that such punitive measures would send “the wrong signal that trade protectionism is experiencing a comeback,” while adding that his country hoped for a positive relationship with EU.

China’s Xinhua news agency, citing the Trade Ministry, reported on Sunday that the Chinese government plans to begin direct negotiations with the EU on the matter on Monday.

The solar panel strife is set against the backdrop of an EU investigation into cheap Chinese telecommunications products imports, while China has begun an investigation into EU steel imports.

Despite the tit-for-tat spat with Europe, China inked numerous bilateral trade agreements with Germany on Sunday in industries including automotive, shipping and oil processing along with an agreement to cooperate on energy conservation and efficiency standards.

Mr. Li, whose visit comes four months ahead of German national elections, is scheduled to meet on Monday with Peer Steinbrueck, Ms. Merkel’s main challenger for the chancellery, along with former chancellor Helmut Schmidt.

The Chinese Premier is on the last leg of his first foreign tour since becoming premier in March, having already stopped in India, Pakistan and Switzerland.

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