China's inward foreign direct investment (IFDI) and outward foreign direct investment (OFDI) has driven the economy since reform and openness, leading to a rising conflict between water environmental pollution and economic development, especially massive industrial water discharge, largely impacting ecological environment and welfare. This paper on the basis of panel data of 29 provinces (prefectures) during 2003 to 2017 uses panel VAR model and firstly use pulse response function to study their correlation among China's bidirectional FDI, economic growth and industrial water discharge. The result shows a long-term stable positive influence among IFDI, OFDI and economic growth, with fluctuation in a short term, but bidirectional FDI contributes to economy within a long term. Bidirectional FDI has yet reached a coordinated development with industrial waste water discharge, during which IFDI decreases industrial waste water discharge at the initial stage, but bounced by OFDI in a short term, otherwise also decrease industrial waste water discharge at some specific developing stages. Economic growth leads to a rise of industrial waste water discharge but at a descending increment. Industrial waste water discharge has little positive influence on IFDI, but outstandingly restricts the OFDI at the initial stage, and imposes a lagging effect on economic growth.