The EU's trade chief said on Thursday he hoped to defuse a long-running row with China over its increasingly dominant telecoms equipment makers by a high-level meeting in June or July, and dropped the threat of an anti-dumping investigation.

However Karel De Gucht said on Thursday the European Commission, the EU executive, was still considering an investigation into illegal subsidies.

Brussels says that European manufacturers Ericsson, Nokia Siemens Networksand Alcatel-Lucent have suffered as a result of cheap Asian imports but that the companies will not make formal complaints for fear of Chinese reprisals, according to EU documents seen by Reuters.

Officials have told Reuters that the primary targets of EU concerns are world No. 2 telecoms equipment maker Huawei and smaller Chinese company ZTE.

"We have decided to drop the telecoms case with respect to anti-dumping," De Gucht, the EU's trade commissioner, told a news conference, referring to EU accusations that Chinese telecom equipment markers sell their products at below the cost of production in Europe, breaking world trade rules.

"There are a number of demands we would like to see fulfilled before we can decide on the subsidies case," he said, adding this was where "the real problem lies."

"I would like to have a solution by the next economic and trade committee meeting with China that we should have end of June or beginning of July in Brussels," De Gucht said.

De Gucht said last year that the Commission planned to open an anti-dumping and anti-subsidy case against China on the telecoms issue, but would first seek to negotiate a solution with Chinese authorities.