A Chinese chamber of commerce on Thursday denied accusations that the country's solar industry has used government subsidies and dumping to sell products at lower-than-cost prices in Europe, warning Brussels to be cautious in launching a trade probe.

Chinese solar products are more competitive than their EU rivals because of the slumping prices of raw materials and domestic technological progress, said the China Chamber of Commerce for Import and Export of Machinery and Electronic Products.

The accusations are not true, as Chinese solar products' competitiveness does not come from dumping or government subsidies, the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) said in a statement on its website.

Germany's SolarWorld and other European solar panel makers last month filed a complaint asking the European Union (EU) to impose punitive tariffs on Chinese solar-equipment imports.

SolarWorld spearheaded a similar initiative in the U.S., leading the country to impose duties of about 31 percent on solar panel imports from China in May.

The CCCME said Chinese solar products are more competitive than their EU rivals because of the slumping prices of raw materials and domestic technological progress.

The price of polysilicon, a key material for making solar panels, tumbled to 20 U.S. dollars per kg last month from over 400 U.S. dollars per kg in 2008, it said.

The CCCME urged the EU to handle the issue in a prudent and fair way, saying that cooperation is better than confrontation between the two sides.

The Ministry of Commerce last week called the dumping allegations groundless, saying protectionist measures will harm the European solar industry.

"Amid global economic uncertainties, a stable free trade environment guarantees the common development of solar industries on both sides," the ministry said.