Lucrative commercial deals dominated the agenda on the first day of President Hu Jintao's first state visit to Germany yesterday.

The eight deals worth US$1.7 billion were scheduled to be signed after talks between Hu and German President Horst Koehler, who officially welcomed his Chinese counterpart with full military honours at the historic Charlottenburg Palace.

The largest deal would be an agreement with German electronics giant Siemens to produce 60 high-speed ICE trains valued at nearly US$1.5 billion for China.

Other agreements would cover environmental technology, power generation, banking, telecommunications, sanitation, culture and construction of a friendship hospital.

These agreements are set to deepen trade links between China and Germany, which is China's largest trade partner in the European Union, and spur economic co-operation.

Bilateral trade amounted to US$54.2 billion last year, accounting for one third of China-EU trade, and is estimated to hit US$130 billion by 2010.

At the end of last year, Germany's direct investment in China had reached US$9.9 billion.

During their talks, Hu on a four-day visit and Koehler agreed to raise Sino-German relations to a new level through maintaining exchanges of high-level visits and more fruitful co-operation.

Hu hailed Germany as an important and reliable partner in China's course to build a well-off society.

He added that the extensive interests shared by the two countries in a complicated, globalized and multi-polar world have laid a solid political foundation for developing bilateral ties.

Hu arrived in the German capital from Britain on the second leg of a three-nation European tour which also takes in Spain.

He is scheduled to meet outgoing Chancellor Gerhard Schroeder and chancellor-designate Angela Merkel today.

Before wrapping up his three-day visit to London, Hu assured Britain that China would stick to a path of peaceful development characterized by peace, openness and co-operation.

Such a road for China is "an inevitable choice" based on its national conditions, its historical and cultural traditions and the current development trend in today's world, he told a Wednesday dinner hosted by Alderman Michael Savory, the Lord Mayor of the City of London.

"China's growth means more opportunities and a bigger market for the rest of the world," President Hu stressed.

Adding cultural colour to his diplomatic mission, Hu and Queen Elizabeth II inaugurated a spectacular exhibition featuring more than 400 treasures at the Royal Academy of Arts on Wednesday.

The exhibition, "China: The Three Emperors 1662-1795," features the artistic riches of imperial China during the reign of the three most powerful emperors of the Qing Dynasty, China's last dynasty, and will last until April 2006.