German Chancellor Angela Merkel and Chinese President Xi Jinping discussed overcapacity in world steel markets and agreed on Saturday to work on solutions within the framework of the G20 group of industrialised nations, Merkel's spokesman said.

In a telephone discussion, the two newly reelected leaders emphasised close ties between the two countries, both facing planned U.S. steel and aluminium tariffs, and agreed to deepen their strategic partnership, Steffen Seibert said in a statement.

They also underscored the importance of multilateral cooperation on global trade, a pointed response to an accelerating shift away from multilateral action and institutions by the United States under President Donald Trump.

Chinese state news agency Xinhua said Xi told Merkel that the two countries should "become advocates for new-type international relations" and become cooperation partners despite their ideological differences, with cooperation to be pushed forward within the framework of the Belt and Road initiative.

"China-Germany relations will steadily proceed far as long as they adhere to equality and mutual respect, understand and care for each other's core interests and major concerns, and properly control and handle their differences," Xinhua said, attributing the comments to Xi.

U.S. officials have said they will seek to work with "like-minded" countries at the Group of 20 finance leaders meeting early next week in Argentina to push back against China's state subsidies and investment policies.

The Merkel-Xi call came amid tensions between the United States, Europe and China over U.S. tariffs, and China's rejection of U.S. legislation encouraging an exchange of officials between the United States and Taiwan. China considers self-ruled and democratic Taiwan a wayward province ineligible for state-to-state relations.