Foreign Direct Investment (FDI), having greatly contributed to China's fast economic development, also brings economic losses to the country, according to an article of the China Business newspaper.

Currently about 500 billion US dollars of FDI stay in China, equivalent to 40 percent of China's gross domestic product (GDP), reported the newspaper. The article said that too much dependence on FDI will lead to enormous opportunity cost of the country.

China enjoys a high rate of residents savings deposits, and if all the deposits can be smoothly and efficiently turned into investment, the country would not need so much FDI, said the newspaper.

By the end of 2004, the savings deposits of urban and rural population totaled more than 11.95 trillion yuan (approximately 1.44 trillion dollars), an increase of 1.59 trillion yuan (192.6 billion dollars) from 2003, according to figures from the National Bureau of Statistics.

Those profits brought by FDI will be eventually sent to foreign countries, so if FDI can be replaced by domestic residents savings,such losses will be avoided, said the newspaper. The article estimated that the present FDI's annual profit in China is about 50 billion US dollars.

FDI may cause deficit both in current account and capital account due to huge amount of profit sent abroad by foreign-funded companies, according to the article.

Since FDI will only be put to places with higher profits, much more FDI will flow to coastal areas and industrial sectors, which will exacerbate the imbalance of China's economic structure, the article said.

Source: Xinhua