Chinese Premier Li Keqiang urged China and Europe to work constructively to resolve the longstanding impasse over the issue of steel and iron overproduction.

Li's comments came discussions at the China-Germany Economic Advisory Committee that was co-chaired by Li and German Chancellor Angela Merkel. Merkel arrive in China on Sunday on a three-day visit.

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"Overcapacity of iron and steel is a global problem, not China's alone. We should separate trade conflicts between China and the EU from the bilateral trade, as the conflicts are a very small part of trade," Li said.

Li added that he and Merkel have agreed to work together to tackle the issue and avoid complicating the issue any further.

Li's remarks were seen as a response to the European Union's complaint that China's steel and iron overproduction is leading to over excessive dumping of cheap steel and iron in the international markets and China's cheap steel exports have been widely blamed by the plummeting profits of global players.

The German steel company ThyssenKrupp, one of the participants of the meeting, insisted that the overcapacity issue would be difficult to solve without China's participation.

However, Chen Derong, general manager of Shanghai-based Baosteel Group, refuted the idea that China was dumping cheap steel in European markets. He claimed that last year China exported only 7 percent of iron and steel production to other countries, which is much lower than that of South Korea and Japan.

Chen also urged that the European Union must loosen trade limits on Chinese steel and iron. On Monday, Merkel said during her speech at Beijing University that the steel overproduction issue must be solved through proper negotiations, adding that no one wants to see at rade war between China and EU.

TagsLi Keqiang, German Chancellor Angela Merkel, china, China and Germany, China steel overcapacity, angela merkel, china, European Union, Germany