Premier Li Keqiang concludes a historic free trade agreement with Switzerland that promises to tighten ties with Europe, China's largest trade partner.

The free trade agreement between China and Switzerland will benefit both nations and bring the second largest economy in the world closer to Europe, Premier Li Keqiang said during his visit to Bern on Saturday.

Premier Li Keqiang shares a light moment with some Swiss youths during his visit to the Einstein Museum in Bern, Switzerland, on Saturday. [Xinhua]

Both countries can tap the huge potential of cooperation in the financial, culture and innovation industries, Li said after meeting delegates from the Chinese embassy and enterprises in the Swiss capital.

"China's pace of growth is within a reasonable range. China is now and will be potentially a great and developing market for a long time yet, and this is an important driving force for the world's economy and a positive factor in the maintenance of world peace," Li said.

China and Switzerland signed a Memorandum of Understanding at the conclusion of free trade talks on Friday, lifting cooperation to a new stage.

Premier Li had talks with President of the Swiss Confederation Ueli Maurer in Bern late Friday and they agreed to expand bilateral investment and trade, and improve the cooperation in high-end machinery manufacturing, precision instruments, biological pharmacy, energy conservation and environment protection, and modern agriculture.

They announced the launch of a financial dialogue mechanism, and cooperation agreements in the horologe business, personnel training and climate change.

"China opposes trade protectionism in the European Union and will continue to advocate trade liberalization," said Li, who believes the Sino-Swiss FTA will open up major opportunities for improving economic and trade relationship between China and the whole of Europe.

The FTA "sends a powerful message to the rest of the world" that China rejects trade and investment protectionism, and embraces trade liberalization and facilitation, the premier reiterated.

China is paying close attention to the EU anti-dumping and anti-subsidy investigations on Chinese exports of solar panel products and telecoms equipment, and wishes to resolve the issues through dialogue and consultation, Li said.

The EU has pledged to impose punitive anti-dumping duties on Chinese solar panel products that will come up to about 46 percent. The preliminary ruling is to be released on June 6, and the final decision expected by the end of the year.

The European Commission reportedly plans to send a formal warning to China that it is ready to levy sanctions against telecoms equipment makers Huawei and ZTE Corp over illegal subsidies.

The signing of the memorandum means Switzerland will be the first country in continental Europe to reach such an agreement with China.

Premier Li pledged to strengthen and improve the macroeconomic policy, to boost economic growth, control inflation and push forward structural reforms.

China's GDP increased 7.7 percent in the first quarter of 2013 year on year, compared to a growth of 7.8 percent for the whole year in 2012.

Wang Haifeng, an expert at the Institute of Foreign Economics under the National Development and Reform Commission, said that the upgrading of cooperation between China and Switzerland would facilitate economic development in both countries.

"The strong innovation capacity of Swiss manufacturing and service industries will help China accelerate its economic restructuring and speed up the growth pattern transition," Wang said.

China is now Switzerland's largest trade partner in Asia, while Switzerland is China's seventh largest trade partner and the sixth largest source of foreign investment in Europe. Bilateral trade between China and Switzerland reached $26.3 billion last year. Switzerland is among the first Western countries to establish diplomatic ties with China.

Xu Hongcai, a senior economist at top government think tank China Center for International Economic Exchanges, said closer Sino-Swiss relations in the financial sector would benefit the opening-up of bilateral cooperation.

"It is likely to promote the development of an off-shore center for the yuan in Switzerland where the density of banks is the highest in the world. This will help speed up internationalization of the Chinese currency," Xu said.

Switzerland is the first stop in Europe for the premier's nine-day, four-country State visit. He ends his tour in Germany, where he will arrive on Sunday.