China and the European Union have defused their biggest trade dispute with a deal to regulate Chinese solar panel imports EU Trade Commissioner Karel De Gucht said in a statement.

"We found an amicable solution in the EU-China solar panels case that will lead to a new market equilibrium at sustainable prices," De Gucht said on Saturday.

After six weeks of talks, the EU's trade chief and his Chinese counterpart sealed the deal over the telephone, setting a minimum price for panels from China near spot market prices.

European solar panel makers accuse China of benefiting from huge state subsidies, allowing them to dump about $28bl worth of below-cost solar panels in Europe last year, putting European firms out of business.

Other European industries that have accused China of dumping have faced imports of about $1.33bl a year.

I am satisfied with the offer of a price undertaking submitted by China's solar panel exporters

Karel De Gucht, EU Trade Commissioner

Europe planned to impose hefty tariffs from August 6 but, wary of offending China's leaders and losing business in the world's second economy, a majority of EU governments led by Germany opposed the plan, which led to the compromise deal.

"I am satisfied with the offer of a price undertaking submitted by China's solar panel exporters," De Gucht said, referring to the minimum price for China's imports.

Chinese Commerce Ministry Spokesman Shen Danyang welcomed the deal, hailing a "positive and highly constructive outcome".

Under the terms of the deal, China will also be allowed to meet about half Europe's solar panel demand, if taken at last year's levels.

The statement gave no further details but diplomatic sources said the minimum panel price would be equal to 56 cents per watt of power they produced.

This regime would apply to the first seven gigawatts of solar panels imported, with any above that threshold incurring an average anti-dumping tariff of 47.6 percent, the sources said.

Source: Agencies