The Impact Of Foreign Investors' M & A On China's Economy Security And The Countermeasures

With China's accession to the WTO and to increase the level of opening, Foreign investment scale expands unceasingly in China. Chinese absorption of foreign investment is different form the developing countries in structure and mode. Compared with global cross-border M&A scale, China is lower. After the financial crisis, the world economic situation and global economic environment begin recovery. Moreover, developed countries have been executing relatively loose monetary policy in order to promote economic growth. Besides, the multinational companies have realized the importance of keeping abundant liquidity and strengthening capital reserve in the financial crisis. The overall market liquidity is enough now.China carries out the policy "Transform of the mode of economic development, adjust the industrial structure" to solve the unbalance of economic development of our national economy. Cross-border M&A can drive the development of market economy to the mature market economy and promote the upgrading of industrial structure. At present, our country has more than 40,000 state-owned enterprises. It is difficult only for non-state-owned enterprises to reorganize SOEs. Foreign investment is also promoting China's SOEs realize industrial structure diversification. The proportion of M&A in FDI will gradually improve.In this context, in order to protect our economic security, studying the trend of cross-border M&A in China and understanding positive and negative effect cross-border M&A bringing to our economic security is necessary. We also need to study the experience of foreign major economies in dealing with the cross-border M&A's negative effects to improve the policiy of absorbing cross-border M&A, which is helpful for economic development and has the important theoretical and practical significance.This paper is divided into five parts:The first part is the introduction. Firstly, I analysis the current condition of cross-border M&A.Then,I define the the focus of the paper according to the research of national security from scholars both at home and abroad and illustrate the significance of the study in theory and practice.In the second part, firstly, I distinguish concepts of FDI, transnational M&A and green-field investment. Secondly, I analysis the theoretical basis of FDI and transnational M&A. Finally, I analysis the current situation and trend of China's foreign direct investment and transnational M&A and give detailed theoretical foundation.The third part is the empirical parts. I comprehensively analysis the positive and negative effect of cross-border M&A on our country's economic security,mainly foucusing on foreign direct investment to China's industrial safety, technical security and balanced industrial and regional economics stucture.The fourth part mainly compares the main western developed countries' experience on using foreign investment, to provide reference for China regulating foreign investment.The fifth part is a summary based the above analysis.Some suggestions against risks are given from the central government, local government and enterprises themselves.