Chinese and German leaders said on Thursday that China and Europe should try to resolve their current dispute over solar panel import duty through consultations and avoid anti-dumping proceedings.

"I suggest the European Commission, businesses and China try to solve the issue through communications, rather than by resorting to anti-dumping proceedings," German Chancellor Angela Merkel told reporters after co-chairing the second round of Chinese-German intergovernmental consultations in the morning.

"There is still time, so the best way is consultation," she said.

Chinese Premier Wen Jiabao echoed Merkel's stance, saying consultation is an effective tool to work out trade disputes. "It is also an important outcome of today's intergovernmental consultations, which I think will be exemplary to the world," he added.

China and Germany should oppose protectionism through real actions, address each other's major concerns through consultations, and cooperate in research and development, production and sales, Wen said.

Germany's SolarWorld and other European solar panel makers last month filed an anti-dumping complaint with the European Commission. The European Commission will decide whether or not to investigate within 45 days after that. If an investigation begins, this will be the largest trade dispute involving China in terms of trade volume.

China's solar products exports to the European Union came to a total value of 20.4 billion U.S. dollars in 2011. The country's Ministry of Commerce earlier called the dumping allegations groundless, saying protectionist measures will harm the European solar industry.

Indeed, China and Germany have already complemented and depend on each other in the solar panel industry. In 2011, China imported 764 million U.S. dollars of polysilicon and 360 million U.S. dollars of silver paste. Half of the imported solar panel production pieces of equipment came from Germany, Switzerland and other European countries.

Analysts have said that with uncertainties and the slowdown of the global economy, a stable and free trade environment is the guarantee for Chinese and European enterprises to get over the hard times.

Merkel said she and Wen also touched on protectionism in their talks and reached a conclusion that it would not help solve the current problems.

We all need free trade and to find the conditions for fair competition in each other's country, Merkel said.

"Currently, cooperation between China and Germany, and China and Europe should center around enhancing confidence and saying no to protectionism. We should deepen cooperation and expand the market together," Wen urged.