The European Union Chamber of Commerce, which represents more than 1,600 European companies operating in China, expressed its growing concern over the "hostile" business environment for foreign companies in the country.

Meanwhile, similar concerns were raised during the high-level trade talks between the United States and China.

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In its annual business confidence survey, the chamber reported that the business environment for foreign companies in the world's second-largest economy is becoming "increasingly hostile" and that domestic players are being unduly favored by the country's regulations.

Pessimism among European companies operating in China reached an all-time high after 70 percent of the respondents claimed that they felt significantly less welcomed in China than in the previous years.

A majority of the companies that appeared to face this issue belonged to the information technology, chemical and telecommunication sector.

"I see a sea change. Pessimism is basically far more pronounced," said Chamber President Jörg Wuttke. Alluding to China's Third Plenum reforms, he added, "What has led to this pessimism is the unfulfilled promises."

Third Plenum reforms are designed to promote free markets. However, the survey shows that only 47 percent of European businesses are planning to expand their presence in China. The figure is down from 86 percent in 2013.

The U.S. has also urged China to simplify its regulatory measures.

Speaking ahead of a high-level meeting between U.S. and Chinese business leaders, U.S. Treasury Secretary Jack Lew stated, "Concerns about the business climate have grown in recent years, with foreign businesses confronting a more complex regulatory environment and questioning whether they are welcome in China."

Despite being one of the fastest growing sources of foreign investment for the U.S., China has only $10.2 billion worth of FDI stock in the country.

TagsEuropean Union Chamber of Commerce, Jörg Wuttke, china, China hostile environment, Europe, China hostile business environment, US