China and Switzerland on Saturday signed a free trade agreement in Beijing - a move that came amid escalating tensions between Asia's economic giant and the European Union.

The pact followed China's signing in April of its first free trade accord with a European economy, non-EU member Iceland. Saturday's deal, however, marked the first with an economy in continental Europe.

China's commerce minister Gao Hucheng and Swiss Economy Minister Johann Schneider-Ammann inked the bilateral agreement in a ceremony in China's capital city.

According to government news agency Xinhua, Gao described its free-trade agreement with Switzerland as a comprehensive and mutually beneficial pact that should contribute to increased trade between the two economies.

Xinhua said the bilateral trade volume between China and Switzerland reached $26.31 billion in 2012. The figure for the first five months of this year surged to $22.89 billion, the agency said.

Saturday's free-trade signing came just days after the Chinese government formally began an investigation into whether Europe is selling wine in China below cost, a response to heightened trade tensions with the European Union.

EU officials have said China is only targeting the EU wine industry in retaliation for a dispute with the European Union over cheap Chinese solar panels.