China Power Investments is to take a minority stake in Malta energy supplier Enemalta Corp, Maltese Prime Minister Joseph Muscat said on Wednesday, in a move that gives the Chinese firm an EU foothold in producing photovoltaic units.

In the largest trade dispute between the European Union and China, EU companies accuse Chinese rivals of benefiting from unfair state aid and selling about 21 billion euros ($27.86 billion) worth of solar panels in Europe last year.

The dispute threatened a wider trade war in goods from wine to steel until Brussels and Beijing agreed a minimum price for panels from China in late July and eased tensions.

China Power and Enemalta plan to set up a joint venture to produce photovoltaic units in Malta for sale in the EU. Roof-top photovoltaic units convert energy from the sun into electricity.

Enemalta is currently fully owned by the Maltese government and has a monopoly in the supply of electricity in Malta. It is labouring under a debt burden of 800 million euros which has dented its credit rating.

The Times of Malta newspaper quoted unnamed sources as saying the Chinese company would make an investment of 200 million euros.

The agreement was announced following a meeting between Muscat and his Chinese counterpart Li Keqiang in the city of Dalian, China.

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