CHINA reserves the right to take further action if the European Union hits Chinese exporters with punitive solar panel duties, a senior trade official said yesterday, rejecting claims that Beijing had delayed talks.

Chong Quan, China's deputy international trade representative, also urged the EU to "cautiously use trade remedy measures," as both sides cannot afford a trade war.

The comments are Beijing's strongest on the EU case - the largest investigation the European Commission has ever launched - following China's top leadership transition.

"If the EU side keeps on its path, imposes restrictions on solar products and hurts the interests of Chinese enterprises, the Chinese government will never stand aside," Chong said in a statement.

"We will have no other option but to take all possible measures to protect the legitimate interests of domestic firms," he added.

The commission last September launched a probe into whether Chinese solar panels were being dumped in EU markets and in November began a study into allegations of illegal subsidies.

Some EU officials had suggested China's leadership transition had stalled talks and increased the risk of a solar industry trade war.

"The communication channels between the two sides always have been kept open and China has never suspended or delayed negotiation with the EU," Chong said in the statement.

His comments came days after China's biggest solar panel maker Wuxi Suntech filed for bankruptcy.