CHINESE solar panel makers are urging Beijing to seek talks with the European Union over a dispute they say threatens to escalate into a trade war.

Four big solar panel manufacturers issued a joint statement yesterday appealing for both sides to resolve the disagreement over allegations they receive illegal subsidies and dump their products in the European market.

"The Chinese government should immediately seek high-level dialogue with the EU to find a way to improve the situation," said the statement by Yingli Green Energy Holdings, Suntech Power Holdings, Trina Solar, and Canadian Solar.

It also urged Beijing to take any measures needed to protect the "legitimate rights and interests" of the Chinese industry.

Trade conflicts are gaining momentum as the dismal economic climate has countries sparring over jobs and business.

Germany's SolarWorld AG and other European solar panel makers filed a complaint this week seeking import tariffs on Chinese-made products.

China also faces trade sanctions from the US, which has imposed tariffs on Chinese made solar panels. China has fought back by investigating US support for its solar industry.

The Chinese companies urged the EU to seriously reconsider its anti-dumping investigation, saying the spat could escalate into a trade war over photovoltaic products as solar panels are also known.

The group stoutly denied China was providing any illegal subsidies to its own manufacturers, but noted that the industry is in the midst of a transition as the cost of panels drops.