His comments come as new research by the Cologne Institute for Economic Research (IW Cologne) found the number of German businesses bought by Chinese investors has rocketed over the past seven years.
The study found Chinese firms took over 39 German companies in 2017 and 44 in 2016, compared to just six in 2010.
It also shows China had more than €12billion (£10.6billion) invested in Germany last year, up on around €11billion the year before, and just €100million in 2010.
The research also shows investors are often not directly concerned with the company itself, but rather its patents, research and technology.
Christian Rusche from IW Cologne said: “It could be shown that since 2010 many takeovers and participations take place where many patent applications and investments in research and development were made.”
The revelations come following calls from Mr Machnig to make the takeover of German companies harder.
He told Die Welt: ”It is urgently necessary that we get harsher legal measures throughout the EU this year to effectively counteract acquisition-fantasies as well as technology and know-how outflow.
“With its innovative companies, the EU is attractive for many around the world.
“Takeovers are becoming more frequent, often under market-distorting conditions.”
He added Germany, along with France and Italy, had begun the process to pass new EU-wide laws which would allow member states the power to review and potentially block future takeovers.
The legislation would also require EU members to share information on foreign investments with each other and the European Commission.
However the law is still in the draft phase.
Additional reporting by Monika Pallenberg.