Yang criticised European protectionism, saying "the door must continue to be open" to Chinese goods and services.

He said China would not join the United States, France and other Western powers in calling for sanctions against Iran for its refusal to stop enriching uranium.

"This talk of sanctions at this moment will complicate the situation and stand in the way of finding a diplomatic solution," Yang said at a public appearance at a French think tank.

The United States and its allies fear Iran is using an uranium enrichment drive to secretly develop fissile material for nuclear weapons. Iran says it only wants to produce fuel for a peaceful nuclear energy programme.

Yang argued that Iran had not "totally shut the door" to International Atomic Energy Agency (IAEA) efforts to negotiate a deal and argued that diplomacy should be given a chance.

Later, the foreign minister sits down with President Nicolas Sarkozy before heading to Germany where he will be the first Chinese foreign minister to attend the Munich Security Conference.

The high-profile diplomatic foray comes at a time of European unease over China's stance on Iran, tensions with the United States over Taiwan and calls for Beijing to do more to spur the global recovery.

Yang brushed aside suggestion that a stronger yuan would help restore the gaping trade imbalance between China and Western countries as they struggle with the aftershocks of recession.

The Chinese currency is "at a reasonable and fair level", he said, before adding that Beijing would not sacrifice economic development to help wealthier countries.

"Many people in China are struggling with problems that are not really experienced in the West. In this cold weather, we still have people without central heating," he argued.

Yang said that the United States was at the root of the world finance crisis that led to the world's worst recession in decades.

"Reasonable people would not say that China has caused the United States to outspend itself. China has not caused the American people to buy two or three houses, beyond their means," he said.

Despite the global downturn, China last year managed to speed ahead with economic growth of five percent, Yang said at the French Institute of International Relations in Paris.

China has vast reserves but "on a per capita basis, this is not so great," he argued.

"China helped Europe recover from the economic recession," said the minister, who emphasized Beijing's desire to boast trade with European partners.

The European Union is China's biggest trading partner while China is the EU's second after the United States.

"Am I being protectionist? This is the first question to be answered. If you are being protectionist, it will set off a chain reaction," he warned.

China on Thursday launched a complaint with the World Trade Organisation over European Union penalty taxes on imports of Chinese shoes.

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