* EconMin says new strategy is key to national prosperity
* Proposes investment fund to support core industries
* Identifies Siemens, Thyssenkrupp, Deutsche, carmakers (Adds quotes, background)
By Paul Carrel and Michelle Martin
BERLIN, Feb 5 (Reuters) - Germany's government could take stakes in key domestic companies to prevent foreign takeovers, its Economy Minister said on Tuesday, presenting a marked shift in industrial strategy he said was needed to safeguard the country's prosperity.
The pivot to a more defensive industrial policy is driven by German concerns about foreign - particularly Chinese - companies acquiring its know-how and eroding the manufacturing base on which much of its wealth is built.
Peter Altmaier said the survival of marquee companies like Thyssenkrupp, Siemens, Deutsche Bank and Germany's carmakers was of national importance, suggesting the creation of an investment fund to support key businesses.
"It can go as far as the state taking temporary stakes in companies - not to nationalise them and run them in the long run but to prevent key technologies being sold off and leaving the country," he told a news conference.
The drive to protect and promote its industry coincides with a lull in Germany's economy, Europe's largest, which is losing momentum following a decade of robust expansion.
It also comes against a backdrop of growing protectionist trends worldwide, with Washington and Beijing embroiled in a damaging tariff dispute, and uncertainty surrounding future trade relations between Britain and the euro zone.
Altmaier identified Germany's key industrial sectors as: steel and aluminium, chemicals, machine and plant engineering, optics, autos medical equipment, Green technologies, defence, aerospace and 3D-printing.
Presenting his report, 'National Industry Strategy 2030', he said his preference was for the state not to intervene but, on what he called an uneven global playing field, it might need to.
With its "Made in China 2025" plan, Beijing is pushing the domestic development of technologies including electric cars. It has also been buying know-how abroad through acquisitions including German robotics maker Kuka.
China's transformation from customer to competitor, combined with the rapid development of new technologies like artificial intelligence has prompted Germany to defend its industry.
Altmaier's report said an erosion of Germany's industrial base would lower education, environmental and living standards and, arguing that "size matters", stressed the importance of national and European champions.
"The fact that in Germany hardly any new businesses of this scale have emerged for years is grounds for concern," the report said. European and German competition law should be reviewed to allow businesses to compete fairly at an international level.
Germany's economy grew at its weakest rate in five years in 2018. Growth is forecast to shrink further to 1 percent this year and the country is facing a budget shortfall of around 25 billion euros by 2023. .
Germany's blue-chip DAX share index is full of mature businesses. Berlin had a right and a duty to work with industry to develop, for example, an Internet transport platform or businesses in the health sector, Altmaier said.
"With this we can achieve a turnaround, so that Germany goes from being a passive observer of a development that is already in full swing in the United States, in Japan and in China to again being an actor and a shaper."
Calling for a reform of energy prices, corporate taxes and social security contributions, Altmaier said his strategy aimed to build on 70 years of German prosperity.
"This is a fundamental issue... a question that has great significance for cohesion of the country and the legitimacy of the democratic system," he said.
Additional reporting by Madeline Chambers; editing by John Stonestreet