Chinese residents gather outside Downing Street on Monday to welcome Premier Wen Jiabao as he arrived to meet British Prime Minister David Cameron. [Photo / Associated Press]

The two leaders also discussed cultural and educational exchanges between China and the UK and global issues such as international security, Libya and climate change.

Wen said China was talking to both sides in Libya because the conflict would only be resolved by Libyans themselves, adding: "Foreign troops may be able to win a war, but they can hardly win peace."

Wen said that China and the UK will set up a high-level cultural exchange mechanism and offered two pandas to Edinburgh Zoo as gifts.

The summit builds on Cameron's visit to China last year, which secured a range of commercial and government arrangements, including a Rolls Royce deal worth $1.2 billion.

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This was followed by the visit to the UK by Vice-Premier Li Keqiang when deals worth $2.6 billion were concluded in January.

Kerry Brown, senior fellow at London-based Chatham House, told China Daily that the key points for the UK are having deeper trade links with China, being partners on environmental issues as well as in high-tech areas, and attracting more Chinese investment.

"China is now a much bigger economy than the UK, and this has happened in a very short period of time. So the UK has to pick its strategic interests with China very carefully, because in many ways it is now a much smaller player," Brown said.

The UK wants to encourage China to further develop its financial sector, an area of British expertise, and to work together on creative industries, Brown added.

Duncan Freeman, senior research fellow from the Brussels Institute of Contemporary China Studies, said that there are a number of areas where the UK and China can cooperate.

Both sides need to commit themselves to ensuring that their economies remain open to trade and investment and guarantee that stable long-term growth is achieved through sustainable policies, Freeman said.

Wen addressed the Royal Society in London on Monday afternoon.

He arrived in Berlin late on Monday and will hold a news conference with German Chancellor Angela Merkel on Tuesday.