The Augsburger Allgemeine newspaper said that Bavaria, which hosts industrial giants like BMW (>> Bayerische Motoren Werke) and Siemens, would introduce legislation in the Bundesrat, the national parliament's upper house that represents regions in Germany's highly federated system.

The measure, a parting shot for Bavarian Premier Horst Seehofer, who on Wednesday takes up post in Berlin as federal interior minister, reflects growing concern over Chinese investors' stake-building in prominent European companies.

The proposal would lower from 25 percent to 10 percent the stake threshold at which authorities could examine acquisitions by foreign investors in German firms.

Augsburger Allgemeine reported that the proposal was spurred by the plans of Chinese grid operator State Grid Corporation of China to buy a 20 percent stake in German grid operator 50Hertz.

Earlier this month, China's Geely built up a 10 percent stake in carmaker Daimler, whose Mercedes cars have become a global symbol of German engineering prowess. The newsmagazine Spiegel reported that Geely had also considered Bavarian carmaker BMW before alighting on Daimler.

Manfred Weber, leader of the conservative group in the European Parliament and Seehofer's party ally, told the Augsburg paper that Europe had to do more to protect strategically important countries from Chinese investment.

"We have to be more consistent. China has been strategically active in Europe for awhile, taking over or buying stakes in companies, in Portugal, Greece, the Western Balkans, but also in Germany."

(Reporting by Thomas Escritt; Editing by Mark Heinrich)

Stocks treated in this article : Bayerische Motoren Werke, Daimler, Siemens