China's Utilization Of FDI And Strategic Choice Of Economic Security

Economic security is an inherent part of national security. Compared with political security and military security, economic security plays a fundamental role in maintaining the national security. It includes two layers. One is the "security" layer, which is the external character of economic security and means the national economy is free from the risks inside and outside of a country. The other is the "development" layer, which is the internal character of economic security and indicates that sustainable development is the supreme end of economic security. In a word, under the circumstances of globalization, national economic security means the country has the ability to resist the negative factors from inside and outside of the country that may endanger the national economy and to keep the sustainable development of the national economy as well as the international economic competition ability.Since the opening policy was put in force, China has made great achievement in attracting foreign direct investment (FDI). With the acceleration of globalization, especially after China's entry to WTO, the influence of FDI on China's economic security attracts more and more attention.This paper begins with the common factors that influence the national economic security. In connection with the status quo, the paper reveals the main risks faced with China's economic security, which includes the internal factors such as the economic regulation security, the national economic system and industry security, the financial security, the supply and protection of strategic material, the choice of developing mode and the construction of national economic security management and control ability as well as the short-run and long-run external factors which come from the international society and can't be controlled by the country.FDI has a double-edged influence on national economic security. This paper demonstrates the influence by means of the macroeconomics theory, the econometrics model, and the data from China's utilizing of FDI. For one thing, the positive influence of FDI on our capital surplus, technology innovation, industry improvement, foreign trade, employment and economic development enhances the national economic security. For another, if the government doesn't take measure to regulate FDI, it will continuously increase the country's economy dependence risks, the FDI structure risks, financial risks, national industry risks and sustainable development risks and thus destroys the national economic security.Then the paper researches the reasons for the negative influences. It findsout that there are four gaps between the supply and demand of FDI. First is the gap between the purpose of attracting FDI and the purpose of FDI. China attracts FDI to improve the technology standard, capital surplus and industry structure while the foreign inventors aims to gain from the cheap labor, material and the huge market capability. Second is the gap between the current regulation system and the requirement of the foreign capital for market operation system. Third is the gap between the capital collocation structure and the total demand for capital. Fourth is the gap between the progress of China's industry structure and the international diversion of industry.In the last part, based on the medium-and-long-run national economic security principle, the paper puts forward the strategic advice for maintaining the national economic security while we continue to attract more FDI in the future. From the macro aspect, the government should improve the investment environment and bridge the difference between the supply and demand of FDI. From the micro aspect, the local enterprises should learn through cooperation with foreign companies and joint ventures to speed up the reform and gradually cultivate the ability to invest abroad.