European businesses have welcomed China's decision to lift some of the restrictions on foreign investment in the Shanghai free trade zone, which is seen as a model for future reforms, but have called for nationwide application of the liberalised approach to business.

Stefan Sack, vice-president of the European Union Chamber of Commerce in China and chairman of the Shanghai chapter of the organisation, said the reduction to the scope of the negative list re-establishes European companies' confidence in China's commitment to the free trade zone.

“There is, however, still great room for further eliminating many of the remaining barriers to foreign investment in the zone that would bring benefit both for European business and for China,” said Sack.

The latest changes to the so-called “negative list” remove some curbs on foreign involvement in finance, property, healthcare and entertainment within the 29sq km zone, that combines ports, bonded warehouses and other areas at the edge of Shanghai.

Although the extent of the cuts was slightly lower than the European business community in China had been hoping for and some previous official press statements had forecast, it was still a substantial decrease and an encouraging step in the right direction, the chamber said.

Sack added: “In addition to further reducing the scope of the negative list, what is more important is that the Shanghai authorities now also work with China’s central-level authorities to co-ordinate a speedy nationwide rollout of the Negative List approach and to ensure that those reforms successfully piloted in the zone start to be implemented all across China this year.”