Reserves no cause for concern

China's foreign exchange reserves dropped to $2.99 trillion in January, falling below the $3 trillion level for the first time since early 2011.

Reserves of $3 trillion were claimed to be the psychological bottom line for investor confidence by some people, who thought dipping below that would cause investors to panic.

However, there is no need to worry, given that China's increasingly diversified foreign exchange basket at a time of a weak dollar has helped maintain its foreign exchange stability and there is no possibility of large-scale capital flight.