Chinese political advisor Ye Jiannong has severely criticized the practice of excessive fund development, saying some fund companies are engulfing people's wealth instead of serving as the monetary managing tool for them.

China's funds publicly raised have totaled 500 billion yuan ( about 62.5 billion U.S. dollars), half of them are incurring serious losses or have devaluated, said Ye, member of the National Committee of the Chinese People's Political Consultative Conference.

According to Ye, the market price of one fund, which has been listed for three years, has shrunken 50 percent and another fund has incurred a 10-percent loss in two months since it was listed.

The fund issue system and the related operation procedures still bear the stamp from the previous planned economic system. They used to serve as a temporary tool for fund development, but have gradually become the easy benefits of fund issuers, Ye said.

Some fund companies withdraw higher fund management fees and force down their pure value, only allowing the funds to fluctuate within the scope of the face value, said Ye, also vice-president of East China Normal University.

These ill practices have seriously hurt the interests of many investors and dampened their confidence in buying funds, Ye added.

Efforts must be made to link management fees with the actual performance of the fund so as to discipline the fund managers and try to make the interest of fund managers be identical with those of fund owners.