German Chancellor Angela Merkel raised human rights issues publicly in China on Tuesday -- unlike many Western visitors -- invoking the fall of the Berlin Wall and telling students their country needs "free dialogue".

The German leader, who grew up in the former East Germany, noted in her carefully worded remarks at Beijing's elite Tsinghua University that China and Germany have a forum to discuss rights.

"To me, this dialogue is very important because 25 years ago, when the peaceful revolution took place in the former GDR, this finally led to the fall of the Berlin Wall and enabled us to have a free dialogue," she said, referring to the German Democratic Republic, East Germany's formal name.

"I think it's also important here in China to have such a free dialogue," she said, according to the official English translation of her German-language speech.

Merkel's comments are in contrast to many other recent Western visitors to China, who have shied away from public comments on human rights as they pursue trade deals with the world's second-biggest economy.

The German Chancellor spoke in an auditorium on the Tsinghua campus a little over a month after the 25th anniversary of the bloody June 3-4, 1989 Tiananmen Square crackdown in Beijing, an event Chinese authorities have worked hard to erase from the public memory.

Merkel grew up in Communist East Germany, where freedoms were severely curtailed and the state engaged in mass spying on its citizens.

"It's important that citizens can believe in the power of the law and not the law of the powerful," she said.

"It's important to have laws on this regard, that function as a guardian of principles. You need an open, pluralistic and free society in order to shape the future successfully."

She is on her seventh visit to China since coming to power in 2005 and her trip has been largely focused on business issues, with Germany the EU's biggest economy.

On Monday the two countries signed a series of trade and investment deals, including agreements on two new Volkswagen factories and the sale of 123 Airbus helicopters.

Merkel angered Beijing in 2007 by meeting Tibet's exiled spiritual leader the Dalai Lama, whom Communist Party leaders consider a dangerous separatist.

Any official discussion of human rights on her latest visit had been expected to take place behind closed doors, an approach that German officials have argued can be more effective in China than finger-wagging reprimands.

The German leader was met with polite applause at the end of her address, which also touched on topics including global economic sustainability and climate change.

With relations between China and Japan tense and the two countries' history of war a key element of the backdrop to their disputes, Merkel was asked for her views on nationalist Japanese Prime Minister Shinzo Abe's statements and actions given German apologies for its World War II past, when it was allied with Tokyo.

She declined publicly to criticise Japan, but stressed the difficult process Germany went through in coming to terms with its Nazi history.

Germany's experience "sometimes made it difficult for the country to reflect on its own history under Hitler and the regime of National Socialism", she said.

But she added that Germany's younger generation, beginning in the 1960s, began to confront their elders who experienced Nazism and asked them to explain what they had done.

"I think while this is a difficult question and I think there was also a slow process in this regard in Germany, it was a tough process and there were lots of conflicts and controversial debates," she said.

"But I still believe that it was right that we confronted this issue. It is also important that young people also reflect on the history so that mistakes can be avoided by future generations."