Research On The Impact Of Foreign Direct Investment On Security Of China’s Industrial Policy

In the process of economic globalization, with the further opening of China, FDI has become an important component of China’s economy. The introduction of FDI to China, on the one hand, has brought capital, technology and management experience to China’s economy. While on the other hand, the trend of single proprietorship in FDI lead to its controlling power of industries including market control, equity control and technology control, which would have some negative influence on the implementation of some China’s industrial policy and initiate the issue of security of industrial policy.This paper studies the influence mechanism and the concrete influence of FDI on the security of China’s industrial policy on the basis of researching the factors which affect the security of industrial policy and determining the evaluation criteria of industrial policy security. The main methods are qualitative analysis and case analysis. Qualitative analysis shows that FDI will have a negative impact on the organization policy of the security of industrial organization policy, industrial structure policy, industrial layout policy, industrial technology policy and industrial policy’s effective space, and will hinder the implementation of relevant industrial policies. Case analysis of soybean industry shows that multinational grain merchants have a negative effect on security of soybean industry policy in many ways as controlling the key industrial chain and pricing and large imports of soybean; Case analysis of high-technology industry shows FDI makes an adverse effect on the industrial policy of high-tech mainly through increasing market share, and controlling core technology.Based on the above analysis, this paper proposes policy recommendations such as developing a more rational policy of attracting foreign investment, using WTO to implement more effective industrial policy and establishing a more flexible policy implementation mechanism. This is the first study to choose the effect of FDI on the security of industrial policy as the study object. It conducts a systematic analysis which makes the factor of industrial security and its influences more comprehensive, and enriches the industrial policy security theory. It also provides certain basis for introducing and utilizing foreign capital and maintaining the security of China’s industrial policy.