The European Union said Saturday that it has reached an "amicable solution" with Beijing over imports of Chinese solar panels, a dispute that had threatened to turn into a full-blown trade war.
"We found an amicable solution in the EU-China solar panels case that will lead to a new market equilibrium at sustainable prices," EU Trade Commissioner Karel De Gucht said in a statement.
The breakthrough comes as Brussels and Beijing remain locked in a series of tit-for-tat disputes on other products ranging from steel pipes and telecom equipment to wine and chemicals.
The two sides are major trading powers, rivals and partners. Total trade last year came to nearly $550 billion (415 billion euros), with China enjoying a significant surplus as Europeans have bought up Chinese-made goods from iPhones to steel.
The Chinese government welcomed the deal which "showcased pragmatic and flexible attitudes from both sides and the wisdom to resolve the issue."
Chinese commerce ministry spokesman Shen Danyang said in a state media report that it would encourage "an open, cooperative, stable and sustainable economic and trade relationship."
China is also willing "to further promote exchanges and cooperation with the EU side in the photovoltaic (solar) industry field," Shen added.
De Gucht said that "after weeks of intensive talks," the two sides had agreed a minimum price for imported Chinese solar panels, which EU manufacturers had claimed were being massively dumped in the EU market.
"We are confident that this price undertaking will stabilise the European solar panel market and will remove the injury that the dumping practices have caused to the European industry," he said.
"We have found an amicable solution that will result in a new equilibrium on the European solar panel market at a sustainable price level," De Gucht said.
In June, after months of mutual recriminations, Brussels imposed an emergency anti-dumping tariff of 11.8 % on imports of Chinese solar panels, which was set to rise to 47 % if no settlement was reached by August 6.
De Gucht claimed at the time that Chinese solar panels were being sold to Europe at nearly 90 % below cost, forcing EU manufacturers out of business and costing thousands of jobs.
According to Chinese figures, China exported $35.8 billion worth of solar products in 2011, more than 60 % to the EU, and imported $7.5 billion worth of European solar equipment and raw materials.
De Gucht's statement said the accord "is intended to strike a balance between two key elements -- it (will) remove the injurious dumping found and allows at the same time for a stable solar panel supply to the EU market."
In practice, it means Chinese exporters will respect a minimum price, providing a floor for the market and so remove the "effects of injurious dumping".
The statement gave no further details but earlier this week reports said the minimum panel price would be equal to 57 cents per watt of power they produced.
This pricing regime would apply to the first seven gigawatts of solar panels imported, with any above that incurring an anti-dumping tariff of 47.6 %.
EU ProSun, which lobbied successfully for the June EU action, said the reported figures were absurd since Chinese solar panels were currently being sold at 59 cents per watt while the seven gigawatts quota was in effect giving Beijing a guaranteed slice of the market.
EU ProSun officials were not immediately available Saturday for comment.
Earlier this month, China offered to cap annual exports of solar components to the EU at 10 gigawatts provided they would be either tariff-free or taxed at a low rate.
EU officials said Saturday they could not give precise details of the accord as it still had to be formally approved by EU member states.