The home secretary Theresa May has announced a new pilot scheme enabling Chinese visitors to apply for UK and European visas in a single process.

The move, designed to boost UK business and tourism revenues from the lucrative Chinese market, will see Chinese visitors able to submit online applications for both a British and a Belgian visa at the same time, with a single set of supporting documents. This will enable them to roam freely within the EU’s 26-nation Schengen zone and Britain through a single visa application – the first time that this has been possible.

Announcing the reform, May said: “This scheme will create a one-stop shop for Chinese visitors to the UK and Europe, whether they are coming here for business or leisure.”

The government hopes that the pilot, which comes into effect on July 1, will help attract thousands more Chinese visitors and a stream of extra revenue for UK tourism companies.

Business leaders have long-called for such a system to be brought in, claiming that the excess paperwork of the current system causes Chinese tourists to shun the UK. Visits from China – a market that tourism agency VisitBritain has been targeting with a number of tourism initiatives – fell 7 per cent in 2014, according to the latest International Passenger Survey statistics.

The British Hospitality Association (BHA) estimates that the UK loses out on an estimated £1.2bn per annum because it attracts far fewer Chinese tourists than major European neighbours. The BHA welcomed the new pilot and said it marks another step in the right direction to drive growth and jobs at a crucial time in the UK’s recovery.

“By 2023, China will be the largest outbound tourism economy in the world so it is important that the UK makes every effort to welcome the Chinese traveller into our country,” said BHA chief executive Ufi Ibrahim.

“The government’s decision to streamline the visa application process for Chinese visitors with Schengen is a long-awaited victory for common sense, our economy and the hospitality and tourism industry.”