Some Chinese analysts are raising the question, citing the shift in currency flows and the currency reforms that allow greater speculation in the renminbi.
Tan Yaling, head of the China Research Institute of Foreign Exchange says there was a recent article stating that if the only way China can stimulate the economy is through investment, then China's $3 trillion in foreign exchange reserves will be exhausted within 5 years.
She says speculation is the greatest threat to China's development and this speculation could exhaust China's reserves. Although China has $3.2 trillion in reserves, it isn't enough to protect it from hot money, not when the global forex market trades $5-6 trillion each day. If there is no long-term strategy to defend the reserves, they could be rapidly exhausted.
Currency inflows have plunged this year (PBOC purchases are down 87%) and I suspect they will turn into outflows if the global economy weakens. In this environment, the PBOC must remove money from circulation, exacerbating the deflation. In the end, should China eventually choose to inflate, they could destroy the value of the renminbi.