The EU should receive sweeping extra powers to stave off an unfair competitive threat from state-supported companies in China and elsewhere, the Dutch government has said in a further sign of rising intent in Europe to defend the region’s economic interests.

In a position paper seen by the Financial Times, the Netherlands has called for an overhaul of European competition law that would allow Brussels to intervene if it found that state-backed businesses were distorting markets.

Under the proposals, the European Commission could stop such companies buying EU competitors at inflated valuations or undercutting them with artificially low selling prices. Brussels would also be able to demand greater transparency in foreign companies’ accounts.