European firms in China are feeling the pinch as the country's economic growth slows, a report showed on Tuesday.

About 41 percent of the surveyed 506 European companies operating in China are now re-evaluating their China businesses and planning to cut costs, including through headcount reduction, according to the annual Business Confidence Survey released by the European Chamber and consulting firm Roland Berger.

About 47 percent of the surveyed companies said they plan to expand their operations in China, down by 39 percentage points from 2013.

However, a majority of European businesses would probably increase their investment in China in the event of market access barriers being removed, according to the report.

It said the signing of the EU-China Comprehensive Agreement on Investment is seen as integral to improving the business environment.

"European companies now need a roadmap. This will give them the confidence they need to commit more to China's future development in these economically challenging times," said European Chamber President Jorg Wuttke.

Roland Berger CEO Charles-Edouard Bouee said China's growth over the next few decades would rely on supply side transformation, greater innovation and pruning overcapacity, all of which European businesses can contribute to.

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