China is facing a growing chorus of concern over the changes in the nation's foreign exchange reserves. This issue,while important,is not entirely as it appears. At the very least,it deserves greater attention.

The nation's foreign exchange reserves have reached what we could call a "new normal." From 1994 to 2014,China's foreign exchange reserves increased steadily as a result of a surplus in the country's balance of payments,peaking at US$3.99 trillion in June 2014. Over those two decades,the annual increase averaged more than 30%. During that period,the main concern of political leaders and academics was how to respond to an overly rapid rise in foreign exchange reserves.

Since mid-2014,however,the renminbi has shifted from its steady appreciation to a less predictable two-way movement. That shift has been accompanied by a greater willingness of domestic enterprises and individuals to hold foreign currency assets. It has also encouraged borrowers to speed up repayments of foreign currency debt.

At the same time,we have seen a transfer of foreign exchange reserves from the government to private hands. This has been called "foreign exchange reserves that are hidden among the people," and it is one factor in the reduction of official reserves from their peak levels. In 2016,foreign exchange reserves resumed their climb in March and April but then fell in May and rebounded again in June. By the end of June 2016,foreign exchange reserves had dropped to US$3.21 trillion. Now,the market has begun to worry whether the nation has sufficient foreign exchange reserves.