Li's visit to Germany was the last stop on his first foreign tour since becoming premier and came at a time when the European Union is dealing with complaints Chinese makers of solar panels are dumping their cheap products. The solar panel makers could be hit with hefty anti-dumping duties by the EU.
In her news conference with Li, Merkel said she would work to end the dispute without any permanent tariffs.
In his comments, Li had expressed strong opposition not only to any punitive duties on Chinese solar panels but also to the 27-nation EU conducting a trade probe into Chinese mobile telecommunications products.
His message to Europe was China seeks more cooperation and less protectionism, the official Xinhua News Agency reported.
The report said the solar panel and telecom cases "deserve China's grave concern" as billions of dollars of its exports and thousands of jobs are at stake.
The European Commission reportedly backed a proposal this month to impose punitive tariffs averaging 47 percent on Chinese solar panels to prevent alleged "dumping."
Xinhua in a commentary Tuesday said "what is more worrisome for Beijing is the rising protectionism within the EU and a more aggressive approach taken by Brussels."
The report said in the case of solar panels, most EU member states oppose any tariffs. In the case of the telecom products, Xinhua said, the European Commission, the EU's executive arm, had proposed the probe on its own initiative.
"By playing up to protectionist forces, Brussels is risking a tit-for-tat trade war with Beijing, which would in no way stand idly by," Xinhua said, noting trade has been the main pillar of China-EU relations and any trade confrontation would cost both sides dearly.
The EU currently is China's largest trading partner, with Chinese exports totaling about $377 billion last year. Chinese solar panel exports are about $27 billion.
Chinese Commerce Ministry spokesman Shen Danyang has warned any punitive duties on Chinese solar panels would severely impair bilateral trade ties. He said China's "preference to use dialogue and negotiations to resolve the frictions has not changed."
Li during his Germany visit said China hopes to work with Brussels to find a solution to trade disputes through dialogue and consultation.
The Chinese visitor specifically noted Germany was the only EU country included in his tour, which pointed to the importance attached to China-Germany relations.
Merkel was quoted as saying Germany wants the solar panels and other issues to be resolved through dialogue and negotiation, and permanent EU import duties would be unhelpful and should be avoided.
Germany's Deutsche Welle in an opinion piece said China is Germany's third-largest trading partner and China's high demand for German industrial products had been a factor in Germany getting off rather lightly in the euro crisis.
However, it warned in a trade war between EU and China, Germany would have the most to lose.
The Wall Street Journal reported there were indications Monday EU trade authorities may impose tariffs on Chinese solar panel equipment although a majority of EU governments now appear to be against the plan thanks to weeks of lobbying by China. The tariff issue must be decided by June 6.
The Journal said China already has planned retaliatory measures such as import duties on EU wine. Beijing is also considering import tariffs on EU-made polysilicon, a key raw material in making solar cells, which could affect a major German producer of the material.
"At this stage, any potential temporary measures are an emergency response to rebalance the marketplace for European companies facing life-threatening dumping and unfair competition from China's solar panel industry," the Journal quoted John Clancy, spokesman for EU Trade Commissioner Karel De Gucht, as saying.