By Laurie Chen

BEIJING The head of an influential European business lobby in China said Beijing needs to send a clear message on how it plans to revive its economy and provide clarity on a national security crackdown that is unnerving the foreign business community.

The world's second-largest economy grew at a frail pace in the second quarter, prompting top leaders to promise further policy support and analysts to downgrade their growth forecasts for the year.

"There is this doubt about where China is going, so I think it is a matter of urgency to go out and address these uncertainties," Jens Eskelund, President of the European Chamber of Commerce in China, told Reuters in reference to a policy response he said was sending "mixed messages".

"The next few months, we believe, would be actually quite important in terms of rebuilding confidence in the future trajectory of China," he added during an interview at the group's Beijing headquarters on Monday.

China's prolonged economic slowdown this year comes amid weakening demand both at home and globally, a property crisis and rising unemployment.

The sluggish growth also has coincided with increasing state intervention in the private sector in recent years, with crackdowns on the tech, education, health and due diligence sectors and increased scrutiny of foreign business links.

At the same time, leaders have vowed more support for embattled private entrepreneurs and called for more overseas investment, but confidence remains low.

"China's large market contains huge growth potential and opportunities," the Chinese foreign ministry said in a written statement.

"China will continue to expand market access, comprehensively optimise the business environment ... and protect the rights and interests of entrepreneurs in accordance with the law."

Eskelund, who is also Chief Representative for Danish shipping giant Maersk in Greater China and Northeast Asia, said: "I think China is evolving. Not everything will continue to go upwards at a steep incline forever. So it is natural that ... a very steep growth rate will moderate at some point in time."

The Danish executive added that while he believes a recession is unlikely, Beijing should prioritise boosting consumption, as well as providing more clarity on ambiguous legislation such as a sweeping anti-espionage law that has dented foreign business confidence.

"Our recommendation to the government is really to try to establish the highest possible level of clarity on these issues that would give us firm guardrails that we know to stay within," he said.

While the group has not seen a mass exodus of European firms among its members, he said weak demand and a volatile geopolitical environment have led firms to reassess supply chains. This has come as European leaders have also emphasised derisking their economic ties with China.

European Union trade commissioner Valdis Dombrovskis is due to visit Beijing next month, where he is expected to push for greater market access for EU firms and address the EU's widening trade deficit with China.

"Our interests are very much aligned with private companies in China. In many ways, we don't feel that the divide is between Chinese and foreign companies, but ... private and state-owned enterprises," said Eskelund.

"What we hope to see is that private businesses will be allowed to compete and engage on equal terms to state-owned businesses... really a level playing field."

(Reporting by Laurie Chen in Beijing; Editing by Shri Navaratnam)