Speaking during a roundtable with EU chief Ursula von der Leyen on Thursday, Li insisted that "China is by no means doing what some call a subsidies policy or fiscal subsidies".
"China is not as rich as Europe, and we can't afford it," he said.
"We would not be stupid enough to use the fiscal funds accumulated through the government and the hard work of our people to sell our products to foreign consumers," Li added.
Von der Leyen and European Council President Antonio Costa were in Beijing on Thursday for a summit dominated by tensions between the EU and China over trade and Russia's war in Ukraine.
Chief among the bloc's concerns was its yawning trade deficit with China, which stood at around $360 billion last year.
The EU has also raised fears that Beijing's vast subsidies to its industry could help it undercut European competitors with a flood of cheap exports to the continent.
Li, China's number two official, rejected those claims in a roundtable with the EU's leadership.
"Some enterprises, especially manufacturing enterprises, feel more deeply that China's manufacturing capabilities are too strong, and Chinese people are too hardworking," the Chinese premier said.
"Factories run 24 hours a day," he said.
"Some people think this will cause some new problems in the balance of supply and demand in world production," the Chinese premier said, admitting: "We see this problem too."
Li also rejected claims the Chinese economy -- plagued by sluggish growth for years now -- was in dire straits.
"Of course, there are difficulties and challenges, but it is difficult for us to say that China's economy is in a downturn," he said.
"Our GDP growth rate is always above five percent," he insisted.
Xi says China, EU must deepen trust but bloc chief urges 'real solutions'
Beijing (AFP) July 24, 2025 -
Chinese President Xi Jinping said China and the EU must deepen trust in a turbulent world but the bloc's chiefs called for "real solutions" to move past an inflection point as they met in Beijing on Thursday.
China's leadership has sought to draw the European Union closer as it positions itself as a more reliable partner than the United States and a bedrock of stability in a troubled world.
But the EU has made clear there are deep divisions over trade, fears that cheap, subsidised Chinese goods could overwhelm European markets, and Beijing's tacit support for Russia's war against Ukraine.
Though nominally intended to celebrate 50 years of diplomatic ties, the long list of grievances set the stage for a contentious summit.
Welcoming EU Commission head Ursula von der Leyen and European Council chief Antonio Costa at Beijing's ornate Great Hall of the People, Xi said "the more severe and complex the international situation is, the more important it is for China and the EU to strengthen communication, increase mutual trust and deepen cooperation".
In the context of that turmoil, Xi said, Chinese and European leaders must "make correct strategic choices".
"The challenges facing Europe at present do not come from China," he added.
"There are no fundamental conflicts of interest or geopolitical contradictions between China and the EU," the Chinese leader said.
In response, von der Leyen said "it is vital for China and Europe to acknowledge our respective concerns and come forward with real solutions".
Ties had reached an "inflection point", she warned.
Costa also stressed to the Chinese leader that the bloc wanted to see "concrete progress on issues related to trade and the economy, and we both want our relationship to be... mutually beneficial".
In a separate meeting on Thursday, Chinese Premier Li Qiang told the two EU leaders that "close cooperation" was a "natural choice" for the two major economies.
"As long as both China and the EU earnestly uphold free trade, the international economy and trade will stay dynamic", he said.
Brussels had acknowledged the talks between its top bosses and Chinese leaders would be tense.
"We know that we don't see eye to eye with China on many issues," a senior EU official told AFP last week.
"But we believe that it is essential to have this kind of very direct and open and constructive conversation sitting at the table at the highest level."
- 'Not naive' -
China and the EU also vowed to "step up" efforts to address climate change.
The warming planet has historically been an area of convergence between Brussels and Beijing, with both sides signalling a willingness to cooperate on combating climate change.
Chinese and European leaders agreed on enhancing bilateral cooperation in areas such as the energy transition and committed to accelerating global renewable energy deployment, a joint statement said.
Also on the agenda for the EU is the yawning trade deficit with China that stood at around $360 billion last year and which von der Leyen has described as "unsustainable".
Beijing has dismissed those concerns, insisting that Brussels must "rebalance its mentality", not its economic ties with China.
Von der Leyen has called for "important steps" such as increased market access for European firms in China and reducing Chinese export controls, such as those on strategically crucial rare earths.
If EU concerns were not addressed, "our industry and citizens will demand that we defend our interests", she said in Thursday's talks with Qiang.
The EU has imposed hefty tariffs on electric vehicles imported from China, arguing that Beijing's subsidies unfairly undercut European competitors.
China has rebuffed that claim and announced what were widely seen as retaliatory probes into imported European pork, brandy and dairy products.
A second key source of friction is the war in Ukraine -- Brussels says China's deepening political and economic relations with Russia since the 2022 invasion represent tacit support for Moscow that has helped its economy weather sweeping Western sanctions.
Meeting Xi on Thursday, Costa urged China to "use its influence" to help end Russia's "war of aggression".
Last week, the bloc adopted a new package of sanctions on Russia -- including on two Chinese banks, leading Beijing's commerce minister to issue "solemn representations" to his EU counterpart.
"This is a core issue for Europe," the senior EU official said.
"We're not naive. We're not asking China to cut relations, but to step up the customs and financial controls."
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