A contentious EU trade case targeting Chinese solar panel companies should be resolved through negotiations, Germany’s chancellor said yesterday, reflecting Beijing’s growing clout with its European trading partners.

Angela Merkel’s reluctance to support a trade action instigated by a German company was communicated at a meeting in Beijing with Wen Jiabao, the Chinese premier, and appeared to put her at odds with Karel De Gucht, the EU trade commissioner who has taken a harder line against Beijing for what he contends are unfair trading practices.

Mr De Gucht is expected to open a formal investigation next week to determine whether Chinese manufacturers have dumped their products on the EU market. That review could lead to punitive tariffs – an outcome the chancellor told her Chinese hosts she was keen to avoid.