FXStreet - Official data on China’s foreign-exchange reserves data will be released on Sunday and it is very likely that China will post a record drop for the second consecutive month on account of the central bank intervention to support the falling yuan. China’s foreign reserves are currently at a three-year low. A Bloomberg survey of economists showed foreign reserves likely fell by $118 billion to $3.2 trillion in January, higher than the record $108 billion decline seen in December. Jian Chang, chief China economist at Barclays Plc in Hong Kong, estimates a drop of $140 billion while Commerzbank AG’s Zhou Hao and two others estimate an $80 billion reduction. December’s fall had led to the total draw-down drop more than half a trillion dollars in 2015. It also marked the first annual decrease in the reserves since 1992. Beijing’s foreign-exchange reserves surged almost 200-fold to amount to $4 trillion in 2014. The 17 percent drop since then could not alter its position as the largest holder of reserves in the world. The weak fundamentals in China together with the turbulence in the market had caused investors to become jittery. China grew 6.9 percent in 2015, recording the slowest growth in 25 years. Economists believe growth will further slip this year and come in at 6.5 percent. The Chinese currency has been weakening and to lend support to it the central bank was using their dollar reserve. When the PBoC set the reference rate at an unexpectedly weak level last month yuan dropped to a five year low. The turn of events caused the investors to yank their capital from the Chinese market and park it in the overseas capital. The investors had moved out $1 trillion in capital outflows in 2015. Krishna Memani, chief investment officer at Oppenheimer Funds Inc said via Bloomberg “China is facing a significant capital outflow problem,” said. It’s an astounding reduction in their capital account position.” In a bid to list the yuan in the IMF’s SDR basket, the PboC had in August 2015 depreciated the yuan. Ever since then the draw-down has increased manifold. Further devaluation of the yuan last month led to a stock sell-off pushing the Shanghai Composite Index down 21 percent this year. Providing some relief to the policy makers Chinese stocks as well as the yuan recovered before the Lunar New Year holiday. Shares in Shanghai climbed 1 percent in this week while the Chinese yuan recorded its longest stretch of weekly gains since October 2014. China’s measures adopted to restrict capital outflow have helped to a small extent. Jian Chang, chief China economist at Barclays Plc in Hong Kong said via Bloomberg "China has enforced many measures to limit capital outflows and plug the leaks in its capital account, which may have reduced the reserves drawdown. He has however warned that “ the bias remains for capital to flow out of the country”. Chris Leung, a senior economist at DBS Bank Hong Kong Ltd feels China is under tremendous pressure as “Amid increasing uncertainties and market volatilities, the speed of reserves depletion will likely accelerate in the short term.” For more information, read our latest forex news.